As Filed with
the United States Securities and Exchange Commission on June 27, 2024.
1933
Act Registration No. 033-39519
1940 Act Registration
No. 811-05686
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
N-1A
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REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective
Amendment No. |
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Post-Effective
Amendment No. 109 |
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and/or
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REGISTRATION
STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
☐
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Amendment
No. 113 |
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AIM
Investment Securities Funds (Invesco Investment Securities Funds)
(Exact Name
of Registrant as Specified in Charter)
11
Greenway Plaza, Houston, TX 77046-1173
(Address of
Principal Executive Office)
Registrant’s
Telephone Number, including Area Code: (713) 626-1919
Melanie
Ringold, Esquire
11 Greenway Plaza, Houston, TX 77046
11 Greenway Plaza, Houston, TX 77046
(Name and Address
of Agent for Service)
Copy
to:
|
Taylor
V. Edwards, Esquire
Invesco
Advisers, Inc.
225
Liberty Street, 15th FL
New
York, NY 10281-1087 |
Matthew
R. DiClemente, Esquire
Mena
M. Larmour, Esquire
Stradley
Ronon Stevens & Young, LLP
2005
Market Street, Suite 2600
Philadelphia,
Pennsylvania 19103-7018 |
Approximate
Date of Proposed Public Offering: As soon as practicable after the effective date of this Amendment.
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It
is proposed that this filing will become effective (check appropriate box) | |
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immediately
upon filing pursuant to paragraph (b) |
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X
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on
June 28, 2024 pursuant to paragraph (b) |
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___
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60
days after filing pursuant to paragraph (a) |
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___
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on
(date) pursuant to paragraph (a) |
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___
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75
days after filing pursuant to paragraph (a)(2) |
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on
(date) pursuant to paragraph (a)(2) of rule 485 |
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If
appropriate, check the following box: | |
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___
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This
post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
Prospectus
June
28, 2024
Class:
A (ACCBX), C (ACCEX), R (ACCZX), Y (ACCHX), R5 (ACCWX), R6 (ICBFX)
Invesco
Corporate Bond Fund
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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A-3
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A-12
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A-17
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A-18
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A-27
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Back
Cover |
Invesco
Corporate Bond Fund
Fund Summary
Investment
Objective(s)
The Fund’s
primary investment objective is to seek to provide current income with preservation of capital.
Capital
appreciation is a secondary objective that is sought only when consistent with the Fund’s primary investment objective.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
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Class:
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A
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C
|
R
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Y
|
R5
|
R6
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|
Management
Fees |
0.29
% |
0.29
% |
0.29
% |
0.29
% |
0.29
% |
0.29
% |
|
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Distribution
and/or Service (12b-1) Fees |
0.25
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1.00
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0.50
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None
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None
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None
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Other
Expenses |
0.21
|
0.21
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0.21
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0.21
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0.15
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0.08
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Total
Annual Fund Operating Expenses |
0.75
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1.50
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1.00
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0.50
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0.44
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0.37
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|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 195%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in corporate bonds, and in derivatives
and other instruments that have economic characteristics similar to such securities. For these purposes, a corporate bond is defined as
any corporate debt security with an original term to maturity of greater than one year.
At
least 65% of the Fund’s net assets must be, and up to 100% may be,
invested in investment grade securities; securities issued or guaranteed by the U.S. government, its agencies or instrumentalities; commercial
paper rated Prime by Moody’s Investors Service, Inc. (Moody’s) or A- or higher by S&P Global Ratings (S&P); and
cash and cash equivalents. Investment grade securities are:
(i) securities rated BBB- or higher by S&P or Baa3 or
higher by Moody’s or an equivalent rating by another NRSRO,
(ii) securities with comparable short-term NRSRO ratings,
or (iii) unrated securities determined by the Adviser to be of comparable quality, each at the time of purchase.
Up
to 35% of the Fund’s net assets may be invested in securities rated below
investment grade. Below investment grade securities are commonly referred to as junk bonds. No more than 20% of the Fund’s net
assets may be invested in securities rated B- or below by S&P, or B3 or below by Moody’s, or unrated securities determined
by the investment adviser, Invesco Advisers, Inc. (Invesco or the Adviser), to be of comparable quality (excluding unrated U.S. government
agency obligations). The ratings specified above apply to preferred stocks as well as to corporate bonds.
The
Fund may invest up to 10% of its net assets in preferred stocks. In addition,
the Fund may invest a portion or all of its net assets in securities issued by foreign governments or corporations, including those located
in emerging markets countries, i.e., those that are generally in the early stages of their industrial cycles; provided, however, that
the Fund may not invest more than 30% of its net assets in non-U.S. dollar denominated securities.
The
Fund may invest up to 20% of its net assets in convertible securities.
The
Fund does not generally purchase common stock but may acquire them
as a result of conversion of convertible securities into such common stocks or upon exercise of warrants attached to or included in a
unit with a debt security purchased by the Fund.
The
Fund may purchase mortgage-backed and asset-backed securities such
as collateralized mortgage obligations (CMOs), collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) of any
rating. The Fund may invest in illiquid or thinly traded investments. The Fund may also invest in securities that are subject to resale
restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended. The Fund may also purchase
municipal securities. The Fund’s
1 Invesco
Corporate Bond Fund
investments may
include securities that do not produce immediate cash income, such as zero coupon securities and payment-in-kind securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that a Fund buys or sells a security with payment and delivery taking place in the future. The Fund may also
engage in “to be announced” (TBA) transactions, which are transactions in which a fund buys or sells mortgage-backed securities
on a forward commitment basis.
The
Fund can invest in derivative instruments including swap contracts, options,
futures contracts and forward foreign currency contracts.
The
Fund can use swap contracts, including interest rate swaps, to seek
to hedge or adjust its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to create long
or short exposure to corporate or sovereign debt securities. The Fund can further use credit default index swaps to seek to hedge credit
risk or take a position on a basket of credit entities; total return swaps to gain exposure to a reference asset; and volatility swaps
to adjust the volatility profile of the Fund.
The
Fund can use options to seek investment return or to mitigate risk and
to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated. The Fund can also use credit
default swap options to gain the right to enter into a credit default swap at a specified future date. The Fund can further use swaptions
(options on swaps) to manage interest rate risk; and options on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures, to increase
or reduce its exposure to interest rate changes. The Fund can also use currency futures to hedge against adverse movements in or to increase
or decrease its exposure to foreign currencies.
The
Fund can engage in foreign currency transactions either on a spot basis
or through forward foreign currency contracts to gain or mitigate the risk of foreign currency exposure. Spot contracts allow for prompt
delivery and settlement at the rate prevailing in the currency exchange market at the time. Forward foreign currency contracts are used
to protect against uncertainty in the level of future currency exchange rates or to gain or modify exposure to a particular currency.
The
Fund utilizes active duration (i.e., making investments to reduce or increase
the sensitivity of the Fund’s portfolio to interest rate changes) and yield curve positioning (i.e., making investments that allow
the Fund to benefit from varying interest rates) for risk management and for generating alpha.
The
portfolio managers utilize the Bloomberg U.S. Credit Index as a reference
in structuring the portfolio, but the Fund is not an index fund. The portfolio managers decide on appropriate risk factors—such
as sector and issuer weightings and duration—relative to the index. The portfolio managers then employ proprietary technology to
calculate position sizes for each of these risk factors. In doing so, the portfolio managers consider recommendations from a globally
interconnected team of specialist decision makers in positioning the Fund to generate alpha.
The
portfolio managers generally rely upon a team of market-specific specialists
for trade execution and for assistance in determining efficient ways (in terms of cost-efficiency and security selection) to implement
those recommendations. Although a variety of specialists provide input in the management of the Fund, the portfolio managers retain responsibility
for ensuring the Fund is positioned in a manner that they believe is appropriate in terms of risk exposures and position sizes.
Specialists
employ a bottom-up approach to recommend larger or smaller
exposure to specific risk factors. In general, specialists will look for attractive risk-reward opportunities and securities that they
believe best enable the Fund to pursue those opportunities. The portfolio managers consider the recommendations of these market-specific
specialists in adjusting the Fund’s risk exposures and security selection on a real-time basis using proprietary communication
technology.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and
credit-related
fundamentals, market supply and demand, market dislocations and situation-specific opportunities. The purchase or sale of securities may
be related to a decision to alter the Fund’s macro risk exposure (such as duration, yield curve positioning and sector exposure),
a need to limit or reduce the Fund’s exposure to a particular security or issuer, degradation of an issuer’s credit quality
or general liquidity needs of the Fund.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and environmental, social and governance (“ESG”) considerations. Credit quality analysis for
certain issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
2 Invesco
Corporate Bond Fund
These
securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due, are more
susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield debt
securities tend to be very volatile.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities
denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value.
Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. Without the approval of debt holders, some governmental
debtors have in the past been able to reschedule or restructure their debt payments or declare moratoria on payments.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be
subject
to lower trading volume and greater price fluctuations than companies in more developed markets. Such countries’ economies may
be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging
market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping
standards than companies in more developed countries. As a result, information, including financial information, about such companies
may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement
of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions
(including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership
of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking),
or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate
in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market
securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely
information.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events,
and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade and therefore considered
to have more speculative characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related securities may have
less favorable collateral, credit risk,
3 Invesco
Corporate Bond Fund
liquidity
risk or other underwriting characteristics, and wider variances in interest rate, term, size, purpose and borrower characteristics. The
Fund may invest in mortgage pools that include subprime mortgages, which are loans made to borrowers with weakened credit histories or
with lower capacity to make timely payments on their mortgages. Liquidity risk is even greater for mortgage pools that include
subprime mortgages.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Sector
Focus Risk. The Fund may from time to time have a significant
amount of its assets invested in one market sector or group of related industries. In this event, the Fund’s performance will depend
to a greater extent on the overall condition of the sector or group of industries and there is increased risk that the Fund will lose
significant value if conditions adversely affect that sector or group of industries.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. Liquid securities can become illiquid during periods of market stress. If a significant amount of the Fund’s
securities become illiquid, the Fund may not be able to timely pay redemption proceeds and may need to sell securities at significantly
reduced prices.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Zero
Coupon or Pay-In-Kind Securities Risk.
The value, interest rates, and liquidity of non-cash paying instruments, such as zero coupon and pay-in-kind securities, are subject to
greater fluctuation than other types of securities. The higher yields and interest rates on pay-in-kind securities reflect the payment
deferral and increased credit risk associated with such instruments and that such investments may represent a higher credit risk than
loans that periodically pay interest.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions subject the Fund to market risk because the value or yield of a security at delivery may
be more or less than the purchase price or yield generally available when delivery occurs, and counterparty risk because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction. These transactions also have a leveraging effect on the Fund
because the Fund commits to purchase securities that it does not have to pay for until a later date, which increases the Fund’s
overall investment exposure and, as a result, its volatility.
TBA
Transactions Risk.
TBA transactions involve the risk of loss if the securities received are less favorable than what was anticipated by the Fund when entering
into the TBA transaction, or if the counterparty fails to deliver the securities.
Municipal
Securities Risk. The
risk of a municipal obligation generally depends on the financial and credit status of the issuer.
Constitutional
amendments, legislative enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional
economic conditions may affect the municipal security’s value, interest payments, repayment of principal and the Fund’s
ability to sell the security. Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon
taxable, resulting in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments
that reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal
or state tax status of municipal securities.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Cash/Cash
Equivalents Risk.
In rising markets, holding cash or cash equivalents will negatively affect the Fund’s performance relative to its benchmark.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as
part of a credit analysis may affect the Fund’s exposure to certain issuers or industries and may not work as intended. Information
used to evaluate such factors may not be readily available, complete or accurate, and may vary across providers and issuers. There is
no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
4 Invesco
Corporate Bond Fund
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and a broad-based securities market benchmark (in that order). The
Fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
0.27%
|
|
Best
Quarter |
June
30, 2020 |
10.24%
|
|
Worst
Quarter |
June
30, 2022 |
-8.85%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
9/23/1971
|
3.32
% |
2.17
% |
2.76
% |
|
Return
After Taxes on Distributions |
|
1.38
|
0.35
|
1.01
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
1.92
|
0.96
|
1.39
|
|
| ||||
|
Class
C |
8/30/1993
|
6.07
|
2.31
|
2.60
|
|
| ||||
|
Class
R |
6/6/2011
|
7.79
|
2.83
|
2.97
|
|
| ||||
|
Class
Y |
8/12/2005
|
8.32
|
3.34
|
3.49
|
|
| ||||
|
Class
R5 |
6/1/2010
|
8.22
|
3.38
|
3.57
|
|
| ||||
|
Class
R6 |
9/24/2012
|
8.46
|
3.47
|
3.64
|
|
| ||||
|
Bloomberg
U.S. Credit Index (reflects
no deduction for
fees,
expenses or taxes)1
|
|
8.18
|
2.45
|
2.83
|
|
| ||||
|
Bloomberg U.S. Aggregate Bond Index (reflects no
deduction
for fees, expenses or taxes)1
|
|
5.53
|
1.10
|
1.81
|
|
| ||||
1
Effective June 28, 2024, the Fund
changed its broad-based securities market benchmark from the Bloomberg U.S. Credit Index to the Bloomberg U.S. Aggregate Bond Index to
reflect that the Bloomberg U.S. Aggregate Bond Index can be considered more broadly representative of the overall applicable securities
market.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold
their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement accounts.
After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
The
minimum investments for Class A, C, R and Y shares for fund accounts
are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through
a tax-advantaged arrangement, such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from
a 401(k) plan or individual retirement account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
5 Invesco
Corporate Bond Fund
companies may pay
the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over another investment. Ask your
salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
primary investment objective is to seek to provide current income with preservation of capital. Capital appreciation is a secondary objective
that is sought only when consistent with the Fund’s primary investment objective. The Fund’s investment objectives may be
changed by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in corporate bonds, and in derivatives and other instruments that have economic characteristics
similar to such securities. For these purposes, a corporate bond is defined as any corporate debt security with an original term to maturity
of greater than one year.
At
least 65% of the Fund’s net assets must be, and up to 100% may be,
invested in investment grade securities; securities issued or guaranteed by the U.S. government, its agencies or instrumentalities; commercial
paper rated Prime by Moody’s or A- or higher by S&P; and cash and cash equivalents. Investment grade securities are: (i) securities
rated BBB- or higher by S&P or Baa3 or higher by Moody’s or an equivalent rating by another NRSRO, (ii) securities with
comparable short-term NRSRO ratings, or (iii) unrated securities determined by the Adviser to be of comparable quality, each at the
time of purchase.
Up
to 35% of the Fund’s net assets may be invested in securities rated below
investment grade. Below investment grade securities are commonly referred to as junk bonds. No more than 20% of the Fund’s net
assets may be invested in securities rated B- or below by S&P, or B3 or below by Moody’s, or unrated securities determined
by the Adviser to be of comparable quality (excluding unrated U.S. government agency obligations). The ratings specified above apply to
preferred stocks as well as to corporate bonds.
The
Fund may invest up to 10% of its net assets in preferred stocks. In addition,
the Fund may invest a portion or all of its net assets in securities issued by foreign governments or corporations, including those located
in emerging markets countries, i.e., those that are generally in the early stages of their industrial cycles; provided, however, that
the Fund may not invest more than 30% of its net assets in non-U.S. dollar denominated securities.
The
Fund may invest up to 20% of its net assets in convertible securities.
A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged
for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of
time at a specified price or formula.
The
Fund does not generally purchase common stock but may acquire them
as a result of conversion of convertible securities into such common stocks or upon exercise of warrants attached to or included in a
unit with a debt security purchased by the Fund.
The
Fund may purchase mortgage-backed and asset-backed securities such
as CMOs, CLOs and CDOs of any rating. The Fund may invest in illiquid or thinly traded investments. The Fund may also invest in securities
that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended.
The Fund may also purchase municipal securities. The Fund’s investments may include securities that do not produce immediate cash
income, such as zero coupon
securities and
payment-in-kind securities. Zero coupon securities are debt securities that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current interest. Payment-in-kind securities are debt securities
that pay interest through the issuance of additional securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that a Fund buys or sells a security with payment and delivery taking place in the future. The payment obligation
and the interest rate are fixed at the time a Fund enters into the commitment. No income accrues on such securities until the date a Fund
actually takes delivery of the securities. The Fund may also engage in TBA transactions, which are transactions in which a fund buys or
sells mortgage-backed securities on a forward commitment basis. A TBA transaction typically does not designate the actual security to
be delivered and only includes an approximate principal amount at the time the TBA is entered into.
The
Fund can invest in derivative instruments including swap contracts, options,
futures contracts and forward foreign currency contracts.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap. The Fund can use swap contracts, including interest rate swaps, to seek to hedge or adjust
its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to create long or short exposure
to corporate or sovereign debt securities. The Fund can further use credit default index swaps to seek to hedge credit risk or take a
position on a basket of credit entities; total return swaps to gain exposure to a reference asset; and volatility swaps to adjust the
volatility profile of the Fund.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options to seek investment return or to mitigate risk and
to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated. The Fund can also use credit
default swap options to gain the right to enter into a credit default swap at a specified future date. The Fund can further use swaptions
(options on swaps) to manage interest rate risk; and options on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of the futures contract
tends to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures
contracts are settled by purchasing an offsetting contract, physically delivering the underlying asset on the settlement date or paying
a cash settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures, to increase or reduce
exposure to interest rate changes. The Fund can also use currency futures to hedge against adverse movements in or to increase or decrease
its exposure to foreign currencies.
6 Invesco
Corporate Bond Fund
The
Fund can engage in foreign currency transactions either on a spot basis
or through forward foreign currency contracts to gain or mitigate the risk of foreign currency exposure. Spot contracts allow for prompt
delivery and settlement at the rate prevailing in the currency exchange market at the time.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. Forward foreign currency contracts are used to protect
against uncertainty in the level of future currency exchange rates or to gain or modify exposure to a particular currency.
The
Fund utilizes active duration (i.e., making investments to reduce or increase
the sensitivity of the Fund’s portfolio to interest rate changes) and yield curve positioning (i.e., making investments that allow
the Fund to benefit from varying interest rates) for risk management and for generating alpha.
The
portfolio managers utilize the Bloomberg U.S. Credit Index as a reference
in structuring the portfolio, but the Fund is not an index fund. The portfolio managers decide on appropriate risk factors—such
as sector and issuer weightings and duration—relative to the index. The portfolio managers then employ proprietary technology to
calculate appropriate position sizes for each of these risk factors. In doing so, the portfolio managers consider recommendations from
a globally interconnected team of specialist decision makers in positioning the Fund to generate alpha.
The
portfolio managers generally rely upon a team of market-specific specialists
for trade execution and for assistance in determining efficient ways (in terms of cost-efficiency and security selection) to implement
those recommendations. Although a variety of specialists provide input in the management of the Fund, the portfolio managers retain responsibility
for ensuring the Fund is positioned appropriately in terms of risk exposures and position sizes.
Specialists
employ a bottom-up approach to recommend larger or smaller
exposure to specific risk factors. In general, specialists will look for attractive risk-reward opportunities and securities that best
enable the Fund to pursue those opportunities. The portfolio managers consider the recommendations of these market-specific specialists
in adjusting the Fund’s risk exposures and security selection on a real-time basis using proprietary communication technology.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality or general liquidity needs of the Fund.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and ESG
considerations. Credit quality analysis for certain
issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers
do so, different
factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the
7 Invesco
Corporate Bond Fund
market’s
perception of such strength or in the credit rating of the issuer or the security may affect the value of debt securities. The credit
analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result in buying a debt security
at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market value due to adverse economic, regulatory,
political or company developments than higher rated or investment grade securities. Prices of high yield debt securities tend to be very
volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable time or price,
particularly in times of negative sentiment toward high yield securities.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than
U.S. securities
due to the size of the market or other factors. Changes in political and economic factors in one country or region could adversely affect
conditions in another country or region. Investments in foreign securities may also expose the Fund to time-zone arbitrage risk. At times,
the Fund may emphasize investments in a particular country or region and may be subject to greater risks from adverse events that occur
in that country or region. Unless the Fund has hedged its foreign currency exposure, foreign securities risk also involves the risk of
negative foreign currency rate fluctuations, which may cause the value of securities denominated in such foreign currency (or other instruments
through which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates may fluctuate significantly over
short periods of time. Currency hedging strategies, if used, are not always successful. For instance, currency forward contracts, if used
by the Fund, could reduce performance if there are unanticipated changes in currency exchange rates.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. A foreign government debtor’s willingness
or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign currency reserves, the availability of sufficient foreign exchange, the relative size of the debt burden, the foreign
government debtor’s policy toward its principal international lenders and local political constraints. Certain issuers of foreign
government debt may be dependent on disbursements from foreign governments, multinational agencies and other entities to reduce principal
and interest arrearages on their debt. Without the approval of debt holders, some governmental debtors have in the past been able to reschedule
or restructure their debt payments or declare moratoria on payments.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection,
8 Invesco
Corporate Bond Fund
investigation and
enforcement capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms
located in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted
by audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries
may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more senior securities. For this reason, the value of preferred
securities will usually react more strongly than bonds and other debt securities to actual or perceived changes in the company’s
financial condition or prospects. Preferred securities may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be converted into or exchanged for
a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible
debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed.
Some convertible debt securities may be considered “equity equivalents” because of the feature that makes them convertible
into common stock. Since a convertible security derives a portion of its value from the common stock into which it may be converted, a
convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock. In addition,
certain convertible
securities are
subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events. These convertible
securities are subject to an increased risk of loss and are generally subordinate in rank to other debt obligations of the issuer. Convertible
securities may be rated below investment grade and therefore considered to have more speculative characteristics and greater susceptibility
to default or decline in market value than investment grade securities.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Sector
Focus Risk. The Fund may from time to time have a significant
amount of its assets invested in one market sector or group of related industries. The prices of stocks of issuers in a sector or group
of industries may go up and down in response to changes in economic conditions, government regulations, availability of basic resources
or supplies, or other events that affect that industry or sector more than others. In this event, the Fund’s performance will depend
to a greater extent on the overall condition of the sector or group of industries and there is increased risk that the Fund
9 Invesco
Corporate Bond Fund
will lose significant
value if conditions adversely affect that sector or group of industries. Information about the Fund’s investment in a market sector
or group of industries is available in its annual and semi-annual reports to shareholders and in its reports on Form N-PORT filed with
the SEC.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. An investment may be illiquid due to a lack of trading volume in the investment or if the investment is privately
placed and not traded in any public market or is otherwise restricted from trading. Liquid securities can become illiquid during periods
of market stress. If a significant amount of the Fund’s securities become illiquid, the Fund may not be able to timely pay redemption
proceeds and may need to sell securities at significantly reduced prices.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt securities, which are not registered for sale pursuant to an exemption from
registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Zero
Coupon or Pay-In-Kind Securities Risk.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and less liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular interest payment periods. Prices on non-cash-paying instruments
may be more sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances
than cash-paying securities with similar credit ratings, and thus may be more speculative. Investors may purchase zero coupon and pay-in-kind
securities at a price below the amount payable at maturity. Because such securities do not entitle the holder to any periodic payments
of interest prior to maturity, this prevents any reinvestment of interest payments at prevailing interest rates if prevailing interest
rates rise. The higher yields and interest rates on pay-in-kind securities reflect the payment deferral and increased credit risk associated
with such instruments and that such investments may represent a higher credit risk than coupon loans. Pay-in-kind securities may have
a potential variability in valuations because their continuing accruals require continuing judgments about the collectability of the deferred
payments and the value of any associated collateral. Special tax considerations are associated with investing in certain lower-grade securities,
such as zero coupon or pay-in-kind securities.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or
less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to
counterparty risk
because it relies
on the buyer or seller, as the case may be, to consummate the transaction, and failure by the counterparty to complete the transaction
may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous. These transactions have a
leveraging effect on the Fund because the Fund commits to purchase securities that it does not have to pay for until a later date. These
investments therefore increase the Fund’s overall investment exposure and, as a result, its volatility. Typically, no income accrues
on securities the Fund has committed to purchase prior to the time delivery of the securities is made.
TBA
Transactions Risk.
TBA transactions involve the risk that the securities received may be less favorable than what was anticipated by the Fund when entering
into the TBA transaction. TBA transactions also involve the risk that the counterparty will fail to deliver the securities, exposing the
Fund to further losses. Whether or not the Fund takes delivery of the securities at the termination date of a TBA transaction, the Fund
will nonetheless be exposed to changes in the value of the underlying investments during the term of the agreement.
Municipal
Securities Risk.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Municipal obligations may be more susceptible to downgrades or defaults during recessions or similar periods of economic stress. Municipal
securities structured as revenue bonds are generally not backed by the taxing power of the issuing municipality but rather the revenue
from the particular project or entity for which the bonds were issued. If the Internal Revenue Service determines that an issuer of a
municipal security has not complied with applicable tax requirements, interest from the security could be treated as taxable, which could
result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that
reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal
or state tax status of municipal securities.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount
10 Invesco
Corporate Bond Fund
invested
in the derivative or the anticipated value of the underlying asset. In addition, some derivatives have the potential for unlimited loss,
regardless of the size of the Fund’s initial investment. Leverage may therefore make the Fund’s returns more volatile and
increase the risk of loss. In certain market conditions, losses on derivative instruments can grow larger while the value of the Fund’s
other assets fall, resulting in the Fund’s derivative positions becoming a larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market illiquidity, the Fund may not be able to prevent further losses of value in its derivatives
holdings and the liquidity of the Fund and its ability to meet redemption requests may be impaired to the extent that a substantial portion
of the Fund’s otherwise liquid assets must be used as margin. Another consequence of illiquidity is that the Fund may be required
to hold a derivative instrument to maturity and take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a security denominated in a foreign currency or protect against possible losses
from changes in the relative value of the U.S. dollar against a foreign currency. They are subject to the risk that anticipated currency
movements will not be accurately predicted or do not correspond accurately to changes in the value of the fund's holdings, which could
result in losses and additional transaction costs. The use of forward contracts could reduce performance if there are unanticipated changes
in currency prices. A contract to sell a foreign currency would limit any potential gain that might be realized if the value of the currency
increases. A forward foreign currency contract may also result in losses in the event of a default or bankruptcy of the counterparty.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed
on
a regulated market and cleared through a central clearing house counterparty, which may entail further risks and costs for the Fund.
Swap agreements are privately negotiated in the over-the-counter market and may be entered into as a bilateral contract or may be centrally
cleared. In a centrally cleared swap, immediately following execution of the swap agreement, the swap agreement is submitted for clearing
to a central clearing house counterparty, and the Fund faces the central clearing house counterparty by means of an account with a futures
commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited by the
requirements for taxation of the Fund as a regulated investment company.
Cash/Cash
Equivalents Risk.
To the extent the Fund holds cash or cash equivalents rather than securities or other instruments in which it primarily invests, the Fund
risks losing opportunities to participate in market appreciation and may experience potentially lower returns than the Fund’s benchmark
or other funds that remain fully invested.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary, and not every ESG factor may be identified or evaluated for every investment, and not every investment
or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as part of a credit analysis may affect the Fund’s
exposure to certain issuers or industries and may not work as intended. The Fund may underperform other funds that do not incorporate
ESG factors or that use a different methodology to identify and/or incorporate ESG factors. Information used to evaluate such factors
may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined characteristic,
which could negatively impact the ability to accurately assess credit quality, which could negatively impact the Fund’s performance.
There is no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in high brokerage costs, which may lower the Fund’s actual return. Active trading
also may increase the proportion of the Fund’s gains that are short term, which are taxed at a higher rate than long term
gains.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available
11 Invesco
Corporate Bond Fund
to the Adviser
in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund's SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps markets.
The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies or
this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.29% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Matthew
Brill, CFA, Portfolio Manager, who has been responsible for the Fund since 2013 and has been associated with Invesco and/or its affiliates
since 2013.
■
Chuck
Burge, Portfolio Manager, who has been responsible for the Fund since 2010 and has been associated with Invesco and/or its affiliates
since 2002.
■
Michael
Hyman, Portfolio Manager, who has been responsible for the Fund since 2013 and has been associated with Invesco and/or its affiliates
since 2013.
■
Niklas
Nordenfelt, CFA, Portfolio Manager, who has been responsible for the Fund since 2020 and has been associated with Invesco and/or its affiliates
since 2020. From 2003 to 2020, he was associated with Wells Fargo Asset Management where he served as a Managing Director, Senior Portfolio
Manager and Co-Head of US High Yield.
■
Todd
Schomberg, CFA, Portfolio Manager, who has been responsible for the Fund since 2019 and has been associated with Invesco and/or its affiliates
since 2016.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers'
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 4.25% initial sales charge as listed under the heading “Category II Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a
commission at the time of purchase. For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred
Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist of ordinary income, capital gains, or some
combination of both.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
12 Invesco
Corporate Bond Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
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 | ||||||||||||||
|
Year
ended 02/29/24 |
$6.18
|
$0.30
|
$(0.02
) |
$0.28
|
$(0.29
) |
$—
|
$(0.29
) |
$6.17
|
4.72
% |
$1,086,043
|
0.75
% |
0.75
% |
4.89
% |
195
% |
|
Year
ended 02/28/23 |
7.15
|
0.25
|
(0.98
) |
(0.73
) |
(0.24
) |
—
|
(0.24
) |
6.18
|
(10.14
) |
1,048,198
|
0.77
|
0.77
|
3.91
|
171
|
|
Year
ended 02/28/22 |
7.80
|
0.21
|
(0.49
) |
(0.28
) |
(0.21
) |
(0.16
) |
(0.37
) |
7.15
|
(3.79
) |
1,295,987
|
0.72
|
0.72
|
2.66
|
133
|
|
Year
ended 02/28/21 |
7.80
|
0.22
|
0.25
|
0.47
|
(0.24
) |
(0.23
) |
(0.47
) |
7.80
|
6.14
|
1,342,071
|
0.74
|
0.74
|
2.87
|
182
|
|
Year
ended 02/29/20 |
7.02
|
0.25
|
0.80
|
1.05
|
(0.27
) |
—
|
(0.27
) |
7.80
|
15.20
|
1,224,248
|
0.80
|
0.80
|
3.30
|
192
|
|
| ||||||||||||||
|
Class
C | ||||||||||||||
|
Year
ended 02/29/24 |
6.22
|
0.25
|
(0.00
) |
0.25
|
(0.25
) |
—
|
(0.25
) |
6.22
|
4.11
|
32,470
|
1.50
|
1.50
|
4.14
|
195
|
|
Year
ended 02/28/23 |
7.20
|
0.20
|
(0.98
) |
(0.78
) |
(0.20
) |
—
|
(0.20
) |
6.22
|
(10.84
)(d)
|
35,770
|
1.51
(d)
|
1.51
(d)
|
3.17
(d)
|
171
|
|
Year
ended 02/28/22 |
7.86
|
0.15
|
(0.49
) |
(0.34
) |
(0.16
) |
(0.16
) |
(0.32
) |
7.20
|
(4.60
) |
51,444
|
1.47
|
1.47
|
1.91
|
133
|
|
Year
ended 02/28/21 |
7.87
|
0.17
|
0.24
|
0.41
|
(0.19
) |
(0.23
) |
(0.42
) |
7.86
|
5.23
|
65,404
|
1.49
|
1.49
|
2.12
|
182
|
|
Year
ended 02/29/20 |
7.08
|
0.19
|
0.82
|
1.01
|
(0.22
) |
—
|
(0.22
) |
7.87
|
14.43
|
66,662
|
1.55
|
1.55
|
2.55
|
192
|
|
| ||||||||||||||
|
Class
R | ||||||||||||||
|
Year
ended 02/29/24 |
6.18
|
0.28
|
(0.00
) |
0.28
|
(0.28
) |
—
|
(0.28
) |
6.18
|
4.62
|
15,237
|
1.00
|
1.00
|
4.64
|
195
|
|
Year
ended 02/28/23 |
7.15
|
0.23
|
(0.97
) |
(0.74
) |
(0.23
) |
—
|
(0.23
) |
6.18
|
(10.38
) |
12,401
|
1.02
|
1.02
|
3.66
|
171
|
|
Year
ended 02/28/22 |
7.81
|
0.19
|
(0.49
) |
(0.30
) |
(0.20
) |
(0.16
) |
(0.36
) |
7.15
|
(4.16
) |
13,750
|
0.97
|
0.97
|
2.41
|
133
|
|
Year
ended 02/28/21 |
7.81
|
0.20
|
0.25
|
0.45
|
(0.22
) |
(0.23
) |
(0.45
) |
7.81
|
5.87
|
11,819
|
0.99
|
0.99
|
2.62
|
182
|
|
Year
ended 02/29/20 |
7.02
|
0.23
|
0.81
|
1.04
|
(0.25
) |
—
|
(0.25
) |
7.81
|
15.06
|
12,435
|
1.05
|
1.05
|
3.05
|
192
|
|
| ||||||||||||||
|
Class
Y | ||||||||||||||
|
Year
ended 02/29/24 |
6.19
|
0.31
|
(0.00
) |
0.31
|
(0.31
) |
—
|
(0.31
) |
6.19
|
5.15
|
870,887
|
0.50
|
0.50
|
5.14
|
195
|
|
Year
ended 02/28/23 |
7.16
|
0.27
|
(0.98
) |
(0.71
) |
(0.26
) |
—
|
(0.26
) |
6.19
|
(9.89
) |
594,737
|
0.52
|
0.52
|
4.16
|
171
|
|
Year
ended 02/28/22 |
7.82
|
0.23
|
(0.50
) |
(0.27
) |
(0.23
) |
(0.16
) |
(0.39
) |
7.16
|
(3.66
) |
576,512
|
0.47
|
0.47
|
2.91
|
133
|
|
Year
ended 02/28/21 |
7.82
|
0.24
|
0.25
|
0.49
|
(0.26
) |
(0.23
) |
(0.49
) |
7.82
|
6.40
|
497,643
|
0.49
|
0.49
|
3.12
|
182
|
|
Year
ended 02/29/20 |
7.03
|
0.27
|
0.81
|
1.08
|
(0.29
) |
—
|
(0.29
) |
7.82
|
15.62
|
343,580
|
0.55
|
0.55
|
3.55
|
192
|
|
| ||||||||||||||
|
Class
R5 | ||||||||||||||
|
Year
ended 02/29/24 |
6.18
|
0.32
|
(0.01
) |
0.31
|
(0.31
) |
—
|
(0.31
) |
6.18
|
5.21
|
16,570
|
0.44
|
0.44
|
5.20
|
195
|
|
Year
ended 02/28/23 |
7.16
|
0.27
|
(0.98
) |
(0.71
) |
(0.27
) |
—
|
(0.27
) |
6.18
|
(9.96
) |
13,992
|
0.43
|
0.43
|
4.25
|
171
|
|
Year
ended 02/28/22 |
7.81
|
0.23
|
(0.48
) |
(0.25
) |
(0.24
) |
(0.16
) |
(0.40
) |
7.16
|
(3.47
) |
14,978
|
0.42
|
0.42
|
2.96
|
133
|
|
Year
ended 02/28/21 |
7.81
|
0.25
|
0.24
|
0.49
|
(0.26
) |
(0.23
) |
(0.49
) |
7.81
|
6.45
|
14,418
|
0.44
|
0.44
|
3.17
|
182
|
|
Year
ended 02/29/20 |
7.03
|
0.27
|
0.80
|
1.07
|
(0.29
) |
—
|
(0.29
) |
7.81
|
15.55
|
8,537
|
0.49
|
0.49
|
3.61
|
192
|
|
| ||||||||||||||
|
Class
R6 | ||||||||||||||
|
Year
ended 02/29/24 |
6.19
|
0.32
|
(0.00
) |
0.32
|
(0.32
) |
—
|
(0.32
) |
6.19
|
5.28
|
1,079,568
|
0.37
|
0.37
|
5.27
|
195
|
|
Year
ended 02/28/23 |
7.16
|
0.28
|
(0.98
) |
(0.70
) |
(0.27
) |
—
|
(0.27
) |
6.19
|
(9.77
) |
840,705
|
0.37
|
0.37
|
4.31
|
171
|
|
Year
ended 02/28/22 |
7.82
|
0.23
|
(0.49
) |
(0.26
) |
(0.24
) |
(0.16
) |
(0.40
) |
7.16
|
(3.54
) |
959,566
|
0.35
|
0.35
|
3.03
|
133
|
|
Year
ended 02/28/21 |
7.82
|
0.25
|
0.25
|
0.50
|
(0.27
) |
(0.23
) |
(0.50
) |
7.82
|
6.54
|
677,403
|
0.36
|
0.36
|
3.25
|
182
|
|
Year
ended 02/29/20 |
7.04
|
0.28
|
0.80
|
1.08
|
(0.30
) |
—
|
(0.30
) |
7.82
|
15.62
|
558,866
|
0.41
|
0.41
|
3.69
|
192
|
|
| ||||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns
based
upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges
and is not annualized for periods less than one
year,
if applicable. |
|
(c)
|
Portfolio
turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
|
(d)
|
The
total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1
fees of 0.99% for the year ended February 28, 2023. |
13 Invesco
Corporate Bond Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
(0.18)%
|
4.06%
|
8.48%
|
13.09%
|
17.90%
|
22.91%
|
28.13%
|
33.58%
|
39.26%
|
45.18%
|
|
End
of Year Balance |
$9,981.94
|
$10,406.17
|
$10,848.43
|
$11,309.49
|
$11,790.14
|
$12,291.22
|
$12,813.60
|
$13,358.18
|
$13,925.90
|
$14,517.75
|
|
Estimated
Annual Expenses |
$498.34
|
$76.46
|
$79.70
|
$83.09
|
$86.62
|
$90.31
|
$94.14
|
$98.14
|
$102.32
|
$106.66
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.25%
|
8.68%
|
13.30%
|
18.12%
|
23.14%
|
28.37%
|
33.83%
|
39.52%
|
45.45%
|
51.63%
|
|
End
of Year Balance |
$10,425.00
|
$10,868.06
|
$11,329.95
|
$11,811.47
|
$12,313.46
|
$12,836.78
|
$13,382.34
|
$13,951.09
|
$14,544.01
|
$15,162.13
|
|
Estimated
Annual Expenses |
$76.59
|
$79.85
|
$83.24
|
$86.78
|
$90.47
|
$94.31
|
$98.32
|
$102.50
|
$106.86
|
$111.40
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
0.75%
|
0.75%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.50%
|
7.12%
|
10.87%
|
14.75%
|
18.77%
|
22.93%
|
27.23%
|
31.68%
|
37.28%
|
43.11%
|
|
End
of Year Balance |
$10,350.00
|
$10,712.25
|
$11,087.18
|
$11,475.23
|
$11,876.86
|
$12,292.55
|
$12,722.79
|
$13,168.09
|
$13,727.73
|
$14,311.16
|
|
Estimated
Annual Expenses |
$152.63
|
$157.97
|
$163.50
|
$169.22
|
$175.14
|
$181.27
|
$187.62
|
$194.18
|
$100.86
|
$105.15
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.00%
|
8.16%
|
12.49%
|
16.99%
|
21.67%
|
26.54%
|
31.60%
|
36.86%
|
42.33%
|
48.02%
|
|
End
of Year Balance |
$10,400.00
|
$10,816.00
|
$11,248.64
|
$11,698.59
|
$12,166.53
|
$12,653.19
|
$13,159.32
|
$13,685.69
|
$14,233.12
|
$14,802.44
|
|
Estimated
Annual Expenses |
$102.00
|
$106.08
|
$110.32
|
$114.74
|
$119.33
|
$124.10
|
$129.06
|
$134.23
|
$139.59
|
$145.18
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.50%
|
9.20%
|
14.11%
|
19.24%
|
24.61%
|
30.22%
|
36.08%
|
42.20%
|
48.60%
|
55.29%
|
|
End
of Year Balance |
$10,450.00
|
$10,920.25
|
$11,411.66
|
$11,925.18
|
$12,461.81
|
$13,022.59
|
$13,608.61
|
$14,221.00
|
$14,860.95
|
$15,529.69
|
|
Estimated
Annual Expenses |
$51.13
|
$53.43
|
$55.83
|
$58.34
|
$60.97
|
$63.71
|
$66.58
|
$69.57
|
$72.70
|
$75.98
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
0.44%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.56%
|
9.33%
|
14.32%
|
19.53%
|
24.98%
|
30.68%
|
36.64%
|
42.87%
|
49.38%
|
56.19%
|
|
End
of Year Balance |
$10,456.00
|
$10,932.79
|
$11,431.33
|
$11,952.60
|
$12,497.64
|
$13,067.53
|
$13,663.41
|
$14,286.46
|
$14,937.92
|
$15,619.09
|
|
Estimated
Annual Expenses |
$45.00
|
$47.06
|
$49.20
|
$51.44
|
$53.79
|
$56.24
|
$58.81
|
$61.49
|
$64.29
|
$67.23
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
0.37%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.63%
|
9.47%
|
14.54%
|
19.84%
|
25.39%
|
31.20%
|
37.27%
|
43.63%
|
50.28%
|
57.24%
|
|
End
of Year Balance |
$10,463.00
|
$10,947.44
|
$11,454.31
|
$11,984.64
|
$12,539.53
|
$13,120.11
|
$13,727.57
|
$14,363.16
|
$15,028.17
|
$15,723.97
|
|
Estimated
Annual Expenses |
$37.86
|
$39.61
|
$41.44
|
$43.36
|
$45.37
|
$47.47
|
$49.67
|
$51.97
|
$54.37
|
$56.89
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
14 Invesco
Corporate Bond Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Corporate Bond Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
VK-CBD-PRO-1
|
Prospectus
June 28, 2024
Class:
A (AGREX), C (CGREX), R (RGREX), Y (ARGYX), R5 (IGREX), R6 (FGREX)
Invesco
Global Real Estate Fund
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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5
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10
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10
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11
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A-1
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco
Global Real Estate Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is total return through growth of capital and current income.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares – Purchase and Redemption of Shares” on page
L-1 of the statement of additional information (SAI).
|
Class:
|
A
|
C
|
R
|
Y
|
R5
|
R6
|
|
Management
Fees |
0.75
% |
0.75
% |
0.75
% |
0.75
% |
0.75
% |
0.75
% |
|
| ||||||
|
Distribution
and/or Service (12b-1) Fees |
0.25
|
1.00
|
0.50
|
None
|
None
|
None
|
|
| ||||||
|
Other
Expenses |
0.42
|
0.42
|
0.42
|
0.42
|
0.23
|
0.20
|
|
| ||||||
|
Total
Annual Fund Operating Expenses |
1.42
|
2.17
|
1.67
|
1.17
|
0.98
|
0.95
|
|
| ||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 89%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in securities of real estate
and real estate-related issuers, and in derivatives and other instruments that have economic characteristics similar to such securities.
The Fund invests primarily in real estate investment trusts
(REITs) and equity securities (including common and preferred stock, and convertible securities) of domestic and foreign issuers. The
Fund’s common stock investments may also include China A-shares (shares of companies based in mainland China that trade on the
Shanghai Stock Exchange and the Shenzhen Stock Exchange).
The
Fund concentrates its investments in the securities of domestic and foreign
real estate and real estate-related companies. The Fund considers an issuer to be a real estate or real estate-related company if at least
50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial
or industrial real estate. These issuers include (i) REITs or other real estate operating companies that (a) own property, (b) make
or invest in short-term construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools, and
(ii) issuers whose products and services are related to the real estate industry, such as manufacturers and distributors of building supplies
and financial institutions that issue or service mortgages.
The
Fund may also invest in debt securities of domestic and foreign issuers
(including corporate debt obligations and commercial mortgage-backed securities). The Fund may invest up to 10% of its net assets in non-investment
grade debt securities (commonly known as “junk bonds”) of real estate and real estate-related issuers.
Under
normal circumstances, the Fund will provide exposure to investments
that are economically tied to at least three different countries, including the U.S. and at least 40%, unless market conditions are not
deemed favorable, in which case at least 30% of the Fund’s net assets will provide exposure to investments that are economically
tied to countries other than the U.S. The Fund may invest up to 20% of its net assets in securities of issuers located in emerging market
countries, i.e., those that are generally in the early stages of their industrial cycles.
The
Fund may invest in securities of issuers of all capitalization sizes. Real
estate companies tend to have smaller asset bases compared with other market sectors, therefore, the Fund may hold a significant amount
of securities of small- and mid-capitalization issuers.
The
Fund may engage in short sales of securities. The Fund may engage
in short sales with respect to securities it owns or securities it does not own. Generally, the Fund will sell a security short to (1) take
advantage of an expected decline in the security price in anticipation of purchasing the
1 Invesco
Global Real Estate Fund
same security at
a later date at a lower price, or (2) to protect a profit in a security that it owns. The Fund will not sell a security short if,
as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the Fund’s net assets.
The
Fund can invest in derivative instruments including forward foreign currency
contracts.
The
Fund can use forward foreign currency contracts to hedge against adverse
movements in the foreign currencies in which portfolio securities are denominated; though the Fund has not historically used these instruments.
When
constructing the portfolio, the portfolio managers use a fundamentals-driven
investment process, including an evaluation of factors such as property market cycle analysis, property evaluation and management and
structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management
teams with the ability to effectively manage capital structure decisions and execute their stated strategic plan, and (iii) attractive
valuations relative to peer investment alternatives.
The
portfolio managers focus on equity REITs and real estate operating issuers.
Each qualified security in the investment universe is analyzed using fundamental real estate analysis and valuation review to identify
securities that appear to have relatively favorable long-term prospects and attractive values. Some of the fundamental real estate factors
that are considered include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property
locations, physical attributes, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing
and fixed charge coverage ratios. The issuers that are believed to have the most attractive fundamental real estate attributes are then
evaluated on the basis of relative value. Some of the valuation factors that are considered include: cash flow consistency and growth,
dividend yield, dividend coverage and growth, and cash flow and assets to price multiples.
The
portfolio managers seek to construct a portfolio with risk characteristics
similar to the FTSE EPRA Nareit Developed Index. The Fund uses this index as a guide in structuring the portfolio, but the Fund is not
an index fund.
The
portfolio managers seek to limit risk through various controls, such as
diversifying the portfolio property types and geographic areas as well as by considering the relative liquidity of each security and limiting
the size of any one holding.
The
portfolio managers will consider selling a security if they conclude (1) its
relative valuation has fallen below desired levels, (2) its risk/return profile has changed significantly, (3) its fundamentals
have changed, or (4) a more attractive investment opportunity is identified.
As
part of the Fund’s investment process to implement its investment strategy
in pursuit of its investment objective, the Fund’s portfolio managers may also consider both qualitative and quantitative environmental,
social and governance (ESG) factors they believe to be material to understand an issuer’s fundamentals, assess whether any ESG
factors pose a material financial risk or opportunity to the issuer and determine whether such risks are appropriately reflected in the
issuer’s valuation. This analysis may involve the use of third-party research as well as proprietary research. Consideration of
ESG factors is just one component of the portfolio managers' assessment of issuers eligible for investment and not necessarily determinative
to an investment decision. Therefore, the Fund’s portfolio managers may still invest in securities of issuers that may be viewed
as having a high ESG risk profile. The ESG factors considered by the Fund’s portfolio managers may change over time, one or more
factors may not be relevant with respect to all issuers eligible for investment and ESG considerations may not be applied to each issuer
or Fund investment.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or
guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency. The risks associated with an investment
in the Fund can increase during times of significant market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
REIT
Risk/Real Estate Risk.
Investments in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological
factors that affect property values, rents or occupancies. Shares of real estate related companies, which tend to be small- and mid-cap
companies, may be more volatile and less liquid than larger companies. If a real estate related company defaults on certain types of debt
obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks such as environmental liabilities;
difficulty in valuing and selling the real estate; and economic or regulatory changes.
Investing
in Stocks Risk.
The value of the Fund’s portfolio may be affected by changes in the stock markets. Stock markets may experience significant short-term
volatility and may fall or rise sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected
negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move
in the opposite direction from one or more foreign stock markets.
The
prices of individual stocks generally do not all move in the same direction
at the same time. However, individual stock prices tend to go up and down more dramatically than those of certain other types of investments,
such as bonds. A variety of factors can negatively affect the price of a particular company’s stock. These factors may include,
but are not limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of
the company’s sector or industry, or changes in government regulations affecting the company or its industry. To the extent that
securities of a particular type are emphasized (for example foreign stocks, stocks of small- or mid-cap companies, growth or value stocks,
or stocks of companies in a particular industry), fund share values may fluctuate more in response to events affecting the market for
those types of securities.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities
denominated in such foreign currency (or other instruments
2 Invesco
Global Real Estate Fund
through
which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates may fluctuate significantly over short
periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to
evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
The
Fund's investments in China A-shares are subject to trading restrictions,
quota limitations and clearing and settlement risks.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events,
and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade and therefore considered
to have more speculative characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Geographic
Focus Risk.
The Fund may from time to time have a substantial amount of its assets invested in securities of issuers located in a single country or
a limited number of countries. Adverse economic, political or social conditions in those countries may therefore have a significant negative
impact on the Fund’s investment performance.
Small-
and Mid-Capitalization Companies Risk.
Investing in securities of small- and mid-capitalization companies involves greater risk than customarily is associated with investing
in larger, more established companies. Stocks of small- and mid-capitalization companies tend to be more vulnerable to changing market
conditions, may have little or no operating history or track record of success, and may have more limited product lines and markets, less
experienced management and fewer financial resources than larger companies. These companies’ securities may
be
more volatile and less liquid than those of more established companies. They may be more sensitive to changes in a company’s earnings
expectations and may experience more abrupt and erratic price movements. Smaller companies’ securities often trade in lower volumes
and in many instances, are traded over-the-counter or on a regional securities exchange, where the frequency and volume of trading is
substantially less than is typical for securities of larger companies traded on national securities exchanges. Therefore, the securities
of smaller companies may be subject to wider price fluctuations and it might be harder for the Fund to dispose of its holdings at an acceptable
price when it wants to sell them. Since small- and mid-cap companies typically reinvest a high proportion of their earnings in their business,
they may not pay dividends for some time, particularly if they are newer companies. It may take a substantial period of time to realize
a gain on an investment in a small- or mid-cap company, if any gain is realized at all.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued
3 Invesco
Global Real Estate Fund
mortgage-related
securities may have less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances
in interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Short
Position Risk.
Because the Fund’s potential loss on a short position arises from increases in the value of the asset sold short, the Fund will
incur a loss on a short position, which is theoretically unlimited, if the price of the asset sold short increases from the short sale
price. The counterparty to a short position or other market factors may prevent the Fund from closing out a short position at a desirable
time or price and may reduce or eliminate any gain or result in a loss. In a rising market, the Fund’s short positions will cause
the Fund to underperform the overall market and its peers that do not engage in shorting. If the Fund holds both long and short positions,
and both positions decline simultaneously, the short positions will not provide any buffer (hedge) from declines in value of the Fund’s
long positions. Certain types of short positions involve leverage, which may exaggerate any losses, potentially more than the actual cost
of the investment, and will increase the volatility of the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
of its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s portfolio will not
be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused issuers.
The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended.
The Fund may underperform other funds that do not assess an issuer’s ESG factors or that use a different methodology to identify
and/or incorporate ESG factors. Information used by the Fund to evaluate such factors may not be readily available, complete or accurate,
and may vary across providers and issuers as ESG is not a uniformly defined characteristic. There is no guarantee that the evaluation
of ESG considerations will be additive to the Fund’s performance.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s or Sub-Adviser's judgment about markets, interest rates or the
attractiveness, relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio.
The Fund could experience losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s or Sub-Adviser's
investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments
may adversely affect management of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and
a broad-based securities market benchmark (in that order).
The Fund's past performance (before and after taxes) is
not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
-0.88%
|
|
Best
Quarter |
March
31, 2019 |
14.92%
|
|
Worst
Quarter |
March
31, 2020 |
-27.65%
|
4 Invesco
Global Real Estate Fund
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
4/29/2005
|
2.68
% |
0.62
% |
2.20
% |
|
Return
After Taxes on Distributions |
|
1.98
|
-1.23
|
0.50
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
1.66
|
0.13
|
1.25
|
|
| ||||
|
Class
C |
4/29/2005
|
6.87
|
1.01
|
2.15
|
|
| ||||
|
Class
R |
4/29/2005
|
8.33
|
1.49
|
2.51
|
|
| ||||
|
Class
Y |
10/3/2008
|
8.90
|
2.02
|
3.03
|
|
| ||||
|
Class
R5 |
4/29/2005
|
9.08
|
2.16
|
3.21
|
|
| ||||
|
Class
R6 |
9/24/2012
|
9.17
|
2.24
|
3.28
|
|
| ||||
|
Custom
Invesco Global Real Estate Index (Net)
(reflects
reinvested dividends net of withholding
taxes,
but reflects no deduction for fees, expenses
or
other taxes)1
|
|
9.67
|
2.40
|
3.52
|
|
| ||||
|
MSCI
World IndexSM
(Net) (reflects invested
dividends
net of withholding taxes, but reflects no
deduction
for fees, expenses or taxes) |
|
23.79
|
12.80
|
8.60
|
|
| ||||
1
The Custom Invesco Global Real Estate
Index is composed of the FTSE EPRA Nareit Developed Index (Net) from April 29, 2005 through June 30, 2014; the FTSE EPRA Nareit Global
Index (Net) from July 1, 2014 through June 30, 2021; and the FTSE EPRA Nareit Developed Index (Net) from July 1, 2021 onward.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors
who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement
accounts. After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment Adviser:
Invesco Advisers, Inc. (Invesco or the Adviser)
Investment
Sub-Adviser: Invesco Asset Management Limited (Invesco Asset
Management)
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
The
minimum investments for Class A, C, R and Y shares for fund accounts
are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored
Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement plan assets.
All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in
which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through
a tax-advantaged arrangement, such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from
a 401(k) plan or individual retirement account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over another investment.
Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is total return through growth of capital and current income. The Fund’s investment objective may be changed
by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in securities of real estate and real estate-related issuers, and in derivatives and other
instruments that have economic characteristics similar to such securities. The Fund invests primarily in REITs and equity securities (including
common and preferred stock, and convertible securities) of domestic and foreign issuers.
REITs
are entities that sell equity or debt securities to investors and use the
proceeds to invest in real estate or interests therein. The Fund’s common stock investments may also include China A-shares (shares
of companies based in mainland China that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange).
The
Fund concentrates its investments in the securities of domestic and foreign
real estate and real estate-related companies. The Fund considers an issuer to be a real estate or real estate-related company if at least
50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial
or industrial real estate. These issuers include (i) REITs or other real estate operating
5 Invesco
Global Real Estate Fund
companies that
(a) own property, (b) make or invest in short-term construction and development mortgage loans, or (c) invest in long-term
mortgages or mortgage pools, and (ii) issuers whose products and services are related to the real estate industry, such as manufacturers
and distributors of building supplies and financial institutions that issue or service mortgages.
The
Fund may also invest in debt securities of domestic and foreign issuers
(including corporate debt obligations and commercial mortgage-backed securities). The Fund may invest up to 10% of its net assets in non-investment
grade debt securities (commonly known as “junk bonds”) of real estate and real estate-related issuers. Investment grade
securities are: (i) securities rated BBB- or higher by S&P Global Ratings (S&P) or Baa3 or higher by Moody’s Investors
Service, Inc. (Moody’s) or an equivalent rating by another nationally recognized statistical rating organization (NRSRO), (ii) securities
with comparable short-term NRSRO ratings, or (iii) unrated securities determined by the Adviser to be of comparable quality, each
at the time of purchase.
Under
normal circumstances, the Fund will provide exposure to investments
that are economically tied to at least three different countries, including the U.S. and at least 40%, unless market conditions are not
deemed favorable, in which case at least 30% of the Fund’s net assets will provide exposure to investments that are economically
tied to countries other than the U.S. The Fund may invest up to 20% of its net assets in securities of issuers located in emerging market
countries, i.e., those that are generally in the early stages of their industrial cycles.
The
Fund may invest in securities of issuers of all capitalization sizes. Real
estate companies tend to have smaller asset bases compared with other market sectors, therefore, the Fund may hold a significant amount
of securities of small- and mid-capitalization issuers.
The
Fund considers an issuer to be a small-capitalization issuer if it has a
market capitalization, at the time of purchase, no larger than the largest capitalized issuer included in the Russell 2000®
Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month.
The
Fund considers an issuer to be a mid-capitalization issuer if it has a market
capitalization, at the time of purchase, within the range of market capitalizations of the largest and smallest capitalized issuers included
in the Russell Midcap®
Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. A company’s
“market capitalization” is the value of its outstanding stock.
The
Fund may engage in short sales of securities. A short sale occurs when
the Fund sells a security, but does not deliver a security it owns when the sale settles. Instead, it borrows that security for delivery
when the sale settles. The Fund may engage in short sales with respect to securities it owns or securities it does not own. Generally,
the Fund will sell a security short to (1) take advantage of an expected decline in the security price in anticipation of purchasing
the same security at a later date at a lower price, or (2) to protect a profit in a security that it owns. The Fund will not sell
a security short if, as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the Fund’s
net assets.
The
Fund can invest in derivative instruments including forward foreign currency
contracts.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. The Fund can use forward foreign currency contracts to
hedge against adverse movements in the foreign currencies in which portfolio securities are denominated; though the Fund has not historically
used these instruments.
When
constructing the portfolio, the portfolio managers use a fundamentals-driven
investment process, including an evaluation of factors such as property market cycle analysis, property evaluation and management and
structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management
teams with the ability to effectively manage capital structure decisions and execute their
stated strategic
plan, and (iii) attractive valuations relative to peer investment alternatives.
The
portfolio managers focus on equity REITs and real estate operating issuers.
Each qualified security in the investment universe is analyzed using fundamental real estate analysis and valuation review to identify
securities that appear to have relatively favorable long-term prospects and attractive values. Some of the fundamental real estate factors
that are considered include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property
locations, physical attributes, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing
and fixed charge coverage ratios. The issuers that are believed to have the most attractive fundamental real estate attributes are then
evaluated on the basis of relative value. Some of the valuation factors that are considered include: cash flow consistency and growth,
dividend yield, dividend coverage and growth, and cash flow and assets to price multiples.
The
portfolio managers seek to construct a portfolio with risk characteristics
similar to the FTSE EPRA Nareit Developed Index. The Fund uses this index as a guide in structuring the portfolio, but the Fund is not
an index fund.
The
portfolio managers seek to limit risk through various controls, such as
diversifying the portfolio property types and geographic areas as well as by considering the relative liquidity of each security and limiting
the size of any one holding.
The
portfolio managers will consider selling a security if they conclude (1)
its relative valuation has fallen below desired levels, (2) its risk/return profile has changed significantly, (3) its fundamentals
have changed, or (4) a more attractive investment opportunity is identified.
As
part of the Fund’s investment process to implement its investment strategy
in pursuit of its investment objective, the Fund’s portfolio managers may also consider both qualitative and quantitative environmental,
social and governance (ESG) factors they believe to be material to understand an issuer’s fundamentals, assess whether any ESG
factors pose a material financial risk or opportunity to the issuer and determine whether such risks are appropriately reflected in the
issuer’s valuation. This analysis may involve the use of third-party research as well as proprietary research. Consideration of
ESG factors is just one component of the portfolio managers' assessment of issuers eligible for investment and not necessarily determinative
to an investment decision. Therefore, the Fund’s portfolio managers may still invest in securities of issuers that may be viewed
as having a high ESG risk profile. The ESG factors considered by the Fund’s portfolio managers may change over time, one or more
factors may not be relevant with respect to all issuers eligible for investment and ESG considerations may not be applied to each issuer
or Fund investment.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market
6 Invesco
Global Real Estate Fund
conditions that
are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook
for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment
generally. The value of the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular
industry or sector, such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental
disasters, widespread disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events
may have a significant impact on the value of the Fund’s investments, as well as the financial markets and global economy generally.
Such circumstances may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a
general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
REIT
Risk/Real Estate Risk. Investments
in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological factors that
affect property values, rents or occupancies. Real estate companies, including REITs or similar structures, tend to be small- and mid-cap
companies and their shares may be more volatile and less liquid than larger companies. The value of investments in real estate related
companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage and financial covenants
related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related company defaults on
certain types of debt obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks such as
environmental liabilities; difficulty in valuing and selling the real estate; and economic or regulatory changes.
Investing
in Stocks Risk. Common stock represents an ownership interest
in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation
or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than
exchange-traded securities.
The
value of the Fund’s portfolio may be affected by changes in the stock
markets. Stocks and other equity securities fluctuate in price in response to changes to equity markets in general. Stock markets may
experience significant short-term volatility and may fall or rise sharply at times. Adverse events in any part of the equity or fixed-income
markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other
and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.
The
prices of individual stocks generally do not all move in the same direction
at the same time. However, individual stock prices tend to go up and down more dramatically than those of certain other types of investments,
such as bonds. A variety of factors can negatively affect the
price of a particular
company’s stock. These factors may include, but are not limited to: poor earnings reports, a loss of customers, litigation against
the company, general unfavorable performance of the company’s sector or industry, or changes in government regulations affecting
the company or its industry. To the extent that securities of a particular type are emphasized (for example foreign stocks, stocks of
small- or mid-cap companies, growth or value stocks, or stocks of companies in a particular industry), fund share values may fluctuate
more in response to events affecting the market for those types of securities.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Changes in political and economic factors in one country or region could adversely affect conditions in another country or region. Investments
in foreign securities may also expose the Fund to time-zone arbitrage risk. At times, the Fund may emphasize investments in a particular
country or region and may be subject to greater risks from adverse events that occur in that country or region. Unless the Fund has hedged
its foreign currency exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may
cause the value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign
currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies,
if used, are not always successful. For instance, currency forward contracts, if used by the Fund, could reduce performance if there are
unanticipated changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory,
7 Invesco
Global Real Estate Fund
disclosure, financial
reporting, accounting, auditing and recordkeeping standards than companies in more developed countries and, as a result, the nature and
quality of such information may vary. Information about such companies may be less available and reliable and, therefore, the ability
to conduct adequate due diligence in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies.
In addition, certain emerging market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection,
investigation and enforcement capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection
of accounting firms located in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting
or the audits conducted by audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries
may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
The
Fund's investments in China A-shares are subject to trading restrictions,
quota limitations and clearing and settlement risks.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more senior securities. For this reason, the value of preferred
securities will usually react more strongly than bonds and other debt securities to actual or perceived changes in the company’s
financial condition or prospects. Preferred securities may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be
converted into
or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price
formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged
or redeemed. Some convertible debt securities may be considered “equity equivalents” because of the feature that makes them
convertible into common stock. Since a convertible security derives a portion of its value from the common stock into which it may be
converted, a convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock.
In addition, certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence
of certain triggering events. These convertible securities are subject to an increased risk of loss and are generally subordinate in rank
to other debt obligations of the issuer. Convertible securities may be rated below investment grade and therefore considered to have more
speculative characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Geographic
Focus Risk.
The Fund may from time to time have a substantial amount of its assets invested in securities of issuers located in a single country or
a limited number of countries. If the Fund focuses its investments in this manner, adverse economic, political or social conditions in
those countries may have a significant negative impact on the Fund’s investment performance. This risk is heightened if the Fund
focuses its investments in emerging market countries or developed countries prone to periods of instability. The Schedule of Investments
included in the Fund's annual and semi-annual reports identifies the countries in which the Fund had invested and the level of investment,
as of the date of the reports.
Small-
and Mid-Capitalization Companies Risk. Investing in securities
of small- and mid-capitalization companies involves greater risk than customarily is associated with investing in larger, more established
companies. Stocks of small- and mid-capitalization companies tend to be more vulnerable to changing market conditions, may have little
or no operating history or track record of success, and may have more limited product lines and markets, less experienced management and
fewer financial resources than larger companies. These companies’ securities may be more volatile and less liquid than those of
more established companies. They may be more sensitive to changes in a company’s earnings expectations and may experience more
abrupt and erratic price movements. Smaller companies’ securities often trade in lower volumes and in many instances, are traded
over-the-counter or on a regional securities exchange, where the frequency and volume of trading is substantially less than is typical
for securities of larger companies traded on national securities exchanges. Therefore, the securities of smaller companies may be subject
to wider price fluctuations and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell
them. In addition, investors might seek to trade Fund shares based on their knowledge or understanding of the value of smaller company
securities (this is sometimes referred to as “price arbitrage”), which could interfere with the efficient management of
the Fund. Since small and mid-cap companies typically reinvest a high proportion of their earnings in their business, they may not pay
dividends for some time, particularly if they are newer companies. It may take a substantial period of time to realize a gain on an investment
in a small- or mid-cap company, if any gain is realized at all. The relative sizes of companies may change over time as the securities
market changes, and the Fund is not required to sell the securities of companies whose market capitalizations have grown or decreased
due to market fluctuations.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling
8 Invesco
Global Real Estate Fund
interest
rates may also reduce the Fund’s distributable income because interest payments on floating rate debt instruments held by the Fund
will decline. The Fund could lose money on investments in debt securities if the issuer or borrower fails to meet its obligations to make
interest payments and/or to repay principal in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund
is required to seek recovery upon a default in the payment of interest or the repayment of principal, the Fund may incur additional expenses.
Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit rating of the issuer
or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities may fail to
anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security in advance
of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market value due to adverse economic, regulatory,
political or company developments than higher rated or investment grade securities. Prices of high yield debt securities tend to be very
volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable time or price,
particularly in times of negative sentiment toward high yield securities.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market illiquidity, the Fund may not be able to prevent further losses of value in its derivatives
holdings and the liquidity of the Fund and its ability to meet redemption requests may be impaired to the extent that a substantial portion
of the Fund’s otherwise liquid assets must be used as margin. Another consequence of illiquidity is that the Fund may be required
to hold a derivative instrument to maturity and take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or
9 Invesco
Global Real Estate Fund
require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited by the
requirements for taxation of the Fund as a regulated investment company.
Short
Position Risk.
The Fund will incur a loss on a short position if the price of the asset sold short increases from the short sale price. Because the Fund’s
potential loss on a short position arises from increases in the value of the asset sold short, the extent of such loss, like the price
of the asset sold short, is theoretically unlimited. Short sales are speculative transactions and involve greater reliance on the Adviser’s
ability to accurately anticipate the future value of an asset or markets in general. Any gain on a short position is decreased, and any
loss is increased, by the amount of any payment, dividend, interest or other transaction costs that the Fund may be required to pay with
respect to the asset sold short. The counterparty to a short position or market factors, such as a sharp increase in prices, may prevent
the Fund from closing out a short position at a desirable time or price and may reduce or eliminate any gain or result in a loss. In a
rising market, the Fund’s short positions will cause the Fund to underperform the overall market and its peers that do not engage
in shorting. If the Fund holds both long and short positions, both positions may decline simultaneously, in which case the short positions
will not provide any buffer (hedge) from declines in value of the Fund’s long positions. Certain types of short positions involve
leverage, which may exaggerate any losses, potentially more than the actual cost of the investment, and will increase the volatility of
the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
of its investment objective may vary across types of investments and issuers eligible for investment, and not every ESG factor may be
identified or evaluated for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s
portfolio will not be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused
issuers. The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended. The
Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different
methodology to identify and/or incorporate ESG factors. As investors can differ in their views regarding ESG factors, the Fund may invest
in issuers that do not reflect the views with respect to ESG of any particular investor. Information used by the Fund to evaluate such
factors may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined
characteristic, which could negatively impact the Fund’s ability to accurately assess a company, which could negatively impact
the Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to the Fund’s performance.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s or Sub-Adviser's judgment about markets, interest rates or the
attractiveness, relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio.
The Fund could experience losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s or Sub-Adviser's
investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments
may affect the investments or investment strategies available to the Adviser or Sub-Adviser in connection
with managing the
Fund, which may also adversely affect the ability of the Fund to achieve its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco Asset Management Limited (Invesco Asset Management)
serves as the Fund’s investment sub-adviser. Invesco Asset Management, an affiliate of the Adviser, is located at Perpetual Park,
Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom. Invesco Asset Management has been managing assets on behalf
of consumers, institutional clients and institutional professionals through a broad product range, including investment companies with
variable capital, investment trusts, individual savings accounts, pension funds, offshore funds and other specialist mandates since 1969,
the year Invesco Asset Management was incorporated. Invesco Asset Management provides portfolio management services to the Fund.
In
addition, Invesco has entered into one or more Sub-Advisory Agreements
with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers). Invesco may appoint the Sub-Advisers from time to time
to provide discretionary investment management services, investment advice, and/or order execution services to the Fund. The Sub-Advisers
and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund’s SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps
markets. The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies
or this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.75% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
Invesco,
not the Fund, pays sub-advisory fees, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
10 Invesco
Global Real Estate Fund
Portfolio
Managers
Investment management
decisions for the Fund are made by the investment management teams at Invesco and Invesco Asset Management. The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
James
Cowen, Portfolio Manager, who has been responsible for the Fund since 2008. He has been a member of Invesco's Real Estate Team since 2001
and has been associated with Invesco Asset Management and/or its affiliates since 2001.
■
Grant
Jackson, CFA, Portfolio Manager, who has been responsible for the Fund since 2018 and has been associated with Invesco and/or its affiliates
since 2005.
■
Darin
Turner, Portfolio Manager, who has been responsible for the Fund since 2010 and has been associated with Invesco and/or its affiliates
since 2005.
■
Ping-Ying
Wang, CFA, Portfolio Manager, who has been responsible for the Fund since 2006 and has been associated with Invesco and/or its affiliates
since 1998.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers'
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 5.50% initial sales charge as listed under the heading “Category I Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a
commission at the time of purchase. For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred
Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist of ordinary income, capital gains, or some
combination of both.
Dividends
The Fund generally
declares and pays dividends from net investment income, if any, quarterly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
11 Invesco
Global Real Estate Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
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
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | |||||||||||||||
|
Year
ended 02/29/24 |
$8.82
|
$0.18
|
$(0.27
) |
$(0.09
) |
$(0.14
) |
$—
|
$(0.02
) |
$(0.16
) |
$8.57
|
(0.89
)% |
$70,881
|
1.42
% |
1.42
% |
2.14
% |
89
% |
|
Year
ended 02/28/23 |
11.63
|
0.17
|
(1.87
) |
(1.70
) |
(0.21
) |
(0.90
) |
—
|
(1.11
) |
8.82
|
(14.71
) |
82,570
|
1.38
|
1.38
|
1.67
|
69
|
|
Year
ended 02/28/22 |
10.77
|
0.12
|
1.04
|
1.16
|
(0.30
) |
—
|
—
|
(0.30
) |
11.63
|
10.80
|
107,880
|
1.30
|
1.30
|
1.01
|
88
|
|
Year
ended 02/28/21 |
11.65
|
0.17
|
(0.56
) |
(0.39
) |
(0.21
) |
(0.28
) |
—
|
(0.49
) |
10.77
|
(2.96
) |
108,687
|
1.32
|
1.32
|
1.70
|
160
|
|
Year
ended 02/29/20 |
12.59
|
0.24
|
0.22
|
0.46
|
(0.54
) |
(0.86
) |
—
|
(1.40
) |
11.65
|
3.20
|
143,448
|
1.27
|
1.27
|
1.87
|
60
|
|
| |||||||||||||||
|
Class
C | |||||||||||||||
|
Year
ended 02/29/24 |
8.83
|
0.12
|
(0.27
) |
(0.15
) |
(0.08
) |
—
|
(0.02
) |
(0.10
) |
8.58
|
(1.66
) |
3,137
|
2.17
|
2.17
|
1.39
|
89
|
|
Year
ended 02/28/23 |
11.64
|
0.09
|
(1.87
) |
(1.78
) |
(0.13
) |
(0.90
) |
—
|
(1.03
) |
8.83
|
(15.38
) |
3,619
|
2.13
|
2.13
|
0.92
|
69
|
|
Year
ended 02/28/22 |
10.78
|
0.03
|
1.05
|
1.08
|
(0.22
) |
—
|
—
|
(0.22
) |
11.64
|
9.96
|
5,057
|
2.05
|
2.05
|
0.26
|
88
|
|
Year
ended 02/28/21 |
11.65
|
0.10
|
(0.56
) |
(0.46
) |
(0.13
) |
(0.28
) |
—
|
(0.41
) |
10.78
|
(3.68
) |
5,493
|
2.07
|
2.07
|
0.95
|
160
|
|
Year
ended 02/29/20 |
12.59
|
0.15
|
0.21
|
0.36
|
(0.44
) |
(0.86
) |
—
|
(1.30
) |
11.65
|
2.43
|
12,169
|
2.02
|
2.02
|
1.12
|
60
|
|
| |||||||||||||||
|
Class
R | |||||||||||||||
|
Year
ended 02/29/24 |
8.82
|
0.16
|
(0.27
) |
(0.11
) |
(0.12
) |
—
|
(0.02
) |
(0.14
) |
8.57
|
(1.15
) |
21,082
|
1.67
|
1.67
|
1.89
|
89
|
|
Year
ended 02/28/23 |
11.62
|
0.14
|
(1.86
) |
(1.72
) |
(0.18
) |
(0.90
) |
—
|
(1.08
) |
8.82
|
(14.86
) |
21,290
|
1.63
|
1.63
|
1.42
|
69
|
|
Year
ended 02/28/22 |
10.77
|
0.09
|
1.03
|
1.12
|
(0.27
) |
—
|
—
|
(0.27
) |
11.62
|
10.42
|
24,519
|
1.55
|
1.55
|
0.76
|
88
|
|
Year
ended 02/28/21 |
11.64
|
0.15
|
(0.56
) |
(0.41
) |
(0.18
) |
(0.28
) |
—
|
(0.46
) |
10.77
|
(3.14
) |
23,490
|
1.57
|
1.57
|
1.45
|
160
|
|
Year
ended 02/29/20 |
12.58
|
0.21
|
0.21
|
0.42
|
(0.50
) |
(0.86
) |
—
|
(1.36
) |
11.64
|
2.94
|
22,293
|
1.52
|
1.52
|
1.62
|
60
|
|
| |||||||||||||||
|
Class
Y | |||||||||||||||
|
Year
ended 02/29/24 |
8.81
|
0.20
|
(0.26
) |
(0.06
) |
(0.17
) |
—
|
(0.02
) |
(0.19
) |
8.56
|
(0.64
) |
34,737
|
1.17
|
1.17
|
2.39
|
89
|
|
Year
ended 02/28/23 |
11.62
|
0.19
|
(1.87
) |
(1.68
) |
(0.23
) |
(0.90
) |
—
|
(1.13
) |
8.81
|
(14.50
) |
46,126
|
1.13
|
1.13
|
1.92
|
69
|
|
Year
ended 02/28/22 |
10.77
|
0.15
|
1.03
|
1.18
|
(0.33
) |
—
|
—
|
(0.33
) |
11.62
|
10.98
|
67,783
|
1.05
|
1.05
|
1.26
|
88
|
|
Year
ended 02/28/21 |
11.65
|
0.20
|
(0.57
) |
(0.37
) |
(0.23
) |
(0.28
) |
—
|
(0.51
) |
10.77
|
(2.69
) |
113,549
|
1.07
|
1.07
|
1.95
|
160
|
|
Year
ended 02/29/20 |
12.59
|
0.28
|
0.21
|
0.49
|
(0.57
) |
(0.86
) |
—
|
(1.43
) |
11.65
|
3.46
|
166,069
|
1.02
|
1.02
|
2.12
|
60
|
|
| |||||||||||||||
|
Class
R5 | |||||||||||||||
|
Year
ended 02/29/24 |
8.78
|
0.22
|
(0.27
) |
(0.05
) |
(0.18
) |
—
|
(0.02
) |
(0.20
) |
8.53
|
(0.50
) |
9,681
|
0.98
|
0.98
|
2.58
|
89
|
|
Year
ended 02/28/23 |
11.58
|
0.22
|
(1.87
) |
(1.65
) |
(0.25
) |
(0.90
) |
—
|
(1.15
) |
8.78
|
(14.34
) |
16,615
|
0.99
|
0.99
|
2.06
|
69
|
|
Year
ended 02/28/22 |
10.73
|
0.17
|
1.03
|
1.20
|
(0.35
) |
—
|
—
|
(0.35
) |
11.58
|
11.17
|
87,664
|
0.91
|
0.91
|
1.40
|
88
|
|
Year
ended 02/28/21 |
11.61
|
0.21
|
(0.56
) |
(0.35
) |
(0.25
) |
(0.28
) |
—
|
(0.53
) |
10.73
|
(2.57
) |
124,597
|
0.94
|
0.94
|
2.08
|
160
|
|
Year
ended 02/29/20 |
12.55
|
0.29
|
0.21
|
0.50
|
(0.58
) |
(0.86
) |
—
|
(1.44
) |
11.61
|
3.59
|
164,048
|
0.91
|
0.91
|
2.23
|
60
|
|
| |||||||||||||||
|
Class
R6 | |||||||||||||||
|
Year
ended 02/29/24 |
8.78
|
0.22
|
(0.28
) |
(0.06
) |
(0.18
) |
—
|
(0.02
) |
(0.20
) |
8.52
|
(0.55
) |
20,369
|
0.95
|
0.95
|
2.61
|
89
|
|
Year
ended 02/28/23 |
11.58
|
0.22
|
(1.87
) |
(1.65
) |
(0.25
) |
(0.90
) |
—
|
(1.15
) |
8.78
|
(14.27
) |
29,968
|
0.92
|
0.92
|
2.13
|
69
|
|
Year
ended 02/28/22 |
10.73
|
0.18
|
1.03
|
1.21
|
(0.36
) |
—
|
—
|
(0.36
) |
11.58
|
11.26
|
165,636
|
0.83
|
0.83
|
1.48
|
88
|
|
Year
ended 02/28/21 |
11.61
|
0.22
|
(0.56
) |
(0.34
) |
(0.26
) |
(0.28
) |
—
|
(0.54
) |
10.73
|
(2.48
) |
167,055
|
0.85
|
0.85
|
2.17
|
160
|
|
Year
ended 02/29/20 |
12.55
|
0.30
|
0.22
|
0.52
|
(0.60
) |
(0.86
) |
—
|
(1.46
) |
11.61
|
3.68
|
199,952
|
0.82
|
0.82
|
2.32
|
60
|
|
| |||||||||||||||
|
(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. |
12 Invesco
Global Real Estate Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
(2.12)%
|
1.38%
|
5.01%
|
8.77%
|
12.66%
|
16.69%
|
20.87%
|
25.20%
|
29.68%
|
34.32%
|
|
End
of Year Balance |
$9,788.31
|
$10,138.73
|
$10,501.70
|
$10,877.66
|
$11,267.08
|
$11,670.44
|
$12,088.24
|
$12,521.00
|
$12,969.25
|
$13,433.55
|
|
Estimated
Annual Expenses |
$686.59
|
$141.48
|
$146.55
|
$151.79
|
$157.23
|
$162.86
|
$168.69
|
$174.73
|
$180.98
|
$187.46
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
1.42%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.58%
|
7.29%
|
11.13%
|
15.11%
|
19.23%
|
23.50%
|
27.92%
|
32.50%
|
37.24%
|
42.15%
|
|
End
of Year Balance |
$10,358.00
|
$10,728.82
|
$11,112.91
|
$11,510.75
|
$11,922.83
|
$12,349.67
|
$12,791.79
|
$13,249.74
|
$13,724.08
|
$14,215.40
|
|
Estimated
Annual Expenses |
$144.54
|
$149.72
|
$155.08
|
$160.63
|
$166.38
|
$172.33
|
$178.50
|
$184.89
|
$191.51
|
$198.37
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
2.17%
|
2.17%
|
2.17%
|
2.17%
|
2.17%
|
2.17%
|
2.17%
|
2.17%
|
1.42%
|
1.42%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
2.83%
|
5.74%
|
8.73%
|
11.81%
|
14.97%
|
18.22%
|
21.57%
|
25.01%
|
29.49%
|
34.13%
|
|
End
of Year Balance |
$10,283.00
|
$10,574.01
|
$10,873.25
|
$11,180.96
|
$11,497.38
|
$11,822.76
|
$12,157.34
|
$12,501.39
|
$12,948.94
|
$13,412.51
|
|
Estimated
Annual Expenses |
$220.07
|
$226.30
|
$232.70
|
$239.29
|
$246.06
|
$253.02
|
$260.18
|
$267.55
|
$180.70
|
$187.17
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
1.67%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.33%
|
6.77%
|
10.33%
|
14.00%
|
17.80%
|
21.72%
|
25.77%
|
29.96%
|
34.29%
|
38.76%
|
|
End
of Year Balance |
$10,333.00
|
$10,677.09
|
$11,032.64
|
$11,400.03
|
$11,779.65
|
$12,171.91
|
$12,577.23
|
$12,996.05
|
$13,428.82
|
$13,876.00
|
|
Estimated
Annual Expenses |
$169.78
|
$175.43
|
$181.28
|
$187.31
|
$193.55
|
$200.00
|
$206.66
|
$213.54
|
$220.65
|
$228.00
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
1.17%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.83%
|
7.81%
|
11.94%
|
16.23%
|
20.68%
|
25.30%
|
30.10%
|
35.08%
|
40.25%
|
45.62%
|
|
End
of Year Balance |
$10,383.00
|
$10,780.67
|
$11,193.57
|
$11,622.28
|
$12,067.41
|
$12,529.59
|
$13,009.47
|
$13,507.73
|
$14,025.08
|
$14,562.24
|
|
Estimated
Annual Expenses |
$119.24
|
$123.81
|
$128.55
|
$133.47
|
$138.58
|
$143.89
|
$149.40
|
$155.13
|
$161.07
|
$167.24
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.02%
|
8.20%
|
12.55%
|
17.07%
|
21.78%
|
26.68%
|
31.77%
|
37.07%
|
42.58%
|
48.31%
|
|
End
of Year Balance |
$10,402.00
|
$10,820.16
|
$11,255.13
|
$11,707.59
|
$12,178.24
|
$12,667.81
|
$13,177.06
|
$13,706.78
|
$14,257.79
|
$14,830.95
|
|
Estimated
Annual Expenses |
$99.97
|
$103.99
|
$108.17
|
$112.52
|
$117.04
|
$121.75
|
$126.64
|
$131.73
|
$137.03
|
$142.53
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.05%
|
8.26%
|
12.64%
|
17.20%
|
21.95%
|
26.89%
|
32.03%
|
37.38%
|
42.94%
|
48.73%
|
|
End
of Year Balance |
$10,405.00
|
$10,826.40
|
$11,264.87
|
$11,721.10
|
$12,195.80
|
$12,689.73
|
$13,203.66
|
$13,738.41
|
$14,294.82
|
$14,873.76
|
|
Estimated
Annual Expenses |
$96.92
|
$100.85
|
$104.93
|
$109.18
|
$113.61
|
$118.21
|
$122.99
|
$127.97
|
$133.16
|
$138.55
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
13 Invesco
Global Real Estate Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Global Real Estate Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
GRE-PRO-1
|
Prospectus
June 28, 2024
Class:
A (ADAXX), AX (ACZXX), C (ACNXX), CX (ACXXX), Invesco Cash Reserve (AIMXX), Investor (INAXX), R (AIRXX), Y (AIYXX), R6 (INVXX)
Invesco
Government Money Market Fund
Investor
Class shares offered by this prospectus are offered only to grandfathered investors. Class A, AX and CX shares are closed to new investors.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
You
could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot
guarantee it will do so. An investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The Fund’s sponsor is not required to reimburse the Fund for losses, and you should
not expect that the sponsor will provide financial support to the Fund at any time,
including during periods of market stress.
Table of Contents
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Back
Cover |
Invesco
Government Money Market Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is to provide current income consistent with preservation of capital and liquidity.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries, or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y and Class R6 shares.
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Principal
Investment Strategies of the Fund
The Fund invests
at least 99.5% of its total assets in cash, Government Securities, and repurchase agreements collateralized by cash or Government Securities.
In addition, at least 80% of the Fund’s net assets (plus any borrowings for investment purposes) will be invested, under normal
circumstances, in Government Securities and/or repurchase agreements that are collateralized by Government Securities. In contrast to
the Fund’s 99.5% policy, the Fund’s 80% policy does not include cash or repurchase agreements collateralized by cash. Government
Security generally means any security issued or guaranteed as to principal or interest by the United States, or by a person controlled
or supervised by and acting as an instrumentality of the government of the United States.
The
Fund is a Government Money Market Fund, as defined by Rule 2a-7
under the Investment Company Act of 1940, as amended (Rule 2a-7), that seeks to maintain a stable price of $1.00 per share by using the
amortized cost method to value portfolio securities and rounding the share value to the nearest cent. The Fund invests in conformity with
SEC rules and regulation requirements for money market funds for the quality, maturity, diversification and liquidity of investments.
The Fund invests only in U.S. dollar-denominated securities maturing within 397 calendar days of the date of purchase, with certain exceptions
permitted by applicable regulations. The Fund maintains a dollar-weighted average portfolio maturity of no more than 60 calendar
days, and a dollar-weighted average life to maturity of portfolio securities of not more than 120 calendar days (determined without reference
to exceptions regarding interest rate adjustments). The Fund will limit investments to those securities that are Eligible Securities as
defined by applicable regulations at the time of purchase. Eligible Securities are (i) Government Securities, (ii) shares of other money
market funds, and (iii) securities determined to present minimal credit risks by Invesco Advisers, Inc. (Invesco or the Adviser) pursuant
to guidelines approved by the Fund's Board of Trustees (the Board).
In
selecting securities for the Fund’s portfolio, the portfolio managers focus
on securities that offer safety, liquidity, and a competitive yield.
1 Invesco
Government Money Market Fund
The
portfolio managers normally hold portfolio securities to maturity, but may
sell a particular security when they deem it advisable, such as when market or credit factors materially change.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing.
An
investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The risks associated with an investment in the Fund can increase during times of significant market
volatility. The principal risks of investing in the Fund are:
Money
Market Fund Risk.
You could lose money investing in the Fund. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The share price
of money market funds can fall below the $1.00 share price. The
Fund’s sponsor is not required to reimburse the Fund for losses, and you should not rely on or expect that the sponsor will enter
into support agreements or take other actions to provide financial support to the Fund or maintain the Fund’s $1.00 share price
at any time, including during periods of market stress. The credit quality of the Fund’s holdings can change rapidly
in certain markets, and the default of a single holding could have an adverse impact on the Fund’s share price. The Fund’s
share price can also be negatively affected during periods of high redemption pressures, illiquid markets, and/or significant market volatility.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad
may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s transaction costs.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be
given
that the U.S. government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
Repurchase
Agreement Risk.
If the seller of a repurchase agreement defaults or otherwise does not fulfill its obligations, the Fund may incur delays and losses arising
from selling the underlying securities, enforcing its rights, or declining collateral value.
Yield
Risk. The Fund’s yield will vary as the short-term
securities in its portfolio mature or are sold and the proceeds are reinvested in other securities. When interest rates are very low or
negative, the Fund may not be able to maintain a positive yield or pay Fund expenses out of current income without impairing the Fund’s
ability to maintain a stable net asset value. Additionally, inflation may outpace and diminish investment returns over time. Recent and
potential future changes in monetary policy made by central banks and/or their governments may affect interest rates.
Floating
and Variable Rate Obligations Risk. Some fixed-income securities
have variable or floating interest rates that provide for a periodic adjustment in the interest rate paid on the securities. The rate
adjustment intervals may be regular and range from daily up to annually, or may be based on an event, such as a change in the stated prevailing
market rate. Floating and variable rate securities may be subject to greater liquidity risk than other debt securities, meaning that there
may be limitations on the Fund’s ability to sell the securities at any given time. Such securities also may lose value.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31.
The
Fund’s past performance is not necessarily an indication of its future performance.
Effective
June 28, 2016, the Fund changed its investment strategy from a
prime money market strategy to a strategy that classified the Fund as a “government money market fund,” as defined by Rule
2a-7 under the Investment Company Act of 1940 (1940 Act), and simultaneously changed its name to Invesco Government Money Market Fund.
Performance shown prior to that date reflects the Fund’s former prime money market strategy, which permitted investments in certain
types of securities that as a government money market fund, the Fund is no longer permitted to hold. Consequently, the performance information
below would have been different if the current investment limitations had been in effect during the period prior to the Fund’s
conversion to a government money market fund.
2 Invesco
Government Money Market Fund
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements. All Fund performance shown assumes
the reinvestment of dividends and capital gains and the effect of the Fund's expenses.
Updated
performance information is available on the Fund’s website at www.invesco.com/us.
|
Cash
Reserve |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
1.22%
|
|
Best
Quarter |
December
31, 2023 |
1.25%
|
|
Worst
Quarter |
March
31, 2022 |
0.00%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Invesco
Cash Reserve |
|
|
|
|
|
Return
Before Taxes |
10/16/1993
|
4.74
% |
1.60
% |
0.97
% |
|
Return
After Taxes on Distributions |
|
2.78
|
0.94
|
0.57
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
2.78
|
0.94
|
0.57
|
|
| ||||
|
Class
A |
5/15/2020
|
4.68
|
1.56
1
|
0.93
1
|
|
| ||||
|
Class
AX |
6/7/2010
|
4.74
|
1.60
|
0.97
|
|
| ||||
|
Class
C |
8/4/1997
|
3.11
|
1.22
|
0.80
|
|
| ||||
|
Class
CX |
6/7/2010
|
2.96
|
1.17
|
0.80
|
|
| ||||
|
Class
R |
6/3/2002
|
4.48
|
1.45
|
0.86
|
|
| ||||
|
Class
Y |
10/3/2008
|
4.89
|
1.69
|
1.05
|
|
| ||||
|
Investor
Class |
9/30/2003
|
4.89
|
1.69
|
1.05
|
|
| ||||
|
Class
R6 |
4/4/2017
|
4.98
|
1.73
|
1.09
2
|
|
| ||||
1
Performance shown prior to the inception
date is that of the Fund's Invesco Cash Reserve shares at net asset value restated to reflect the higher 12b-1 fees applicable to Class
A shares. Although invested in the same portfolio of securities, Class A shares' returns of the Fund will be different from Invesco Cash
Reserve shares' returns of the Fund as they have different expenses.
2
Performance shown prior to the inception
date is that of the Fund's Invesco Cash Reserve shares at net asset value and includes the 12b-1 fees applicable to that class. Although
invested in the same portfolio of securities, Class R6 shares' returns of the Fund will be different from Invesco Cash Reserve shares'
returns of the Fund as they have different expenses.
Invesco
Cash Reserve shares’ seven day yield on December 31, 2023, was 4.94%.
For the current seven day yield, call (800) 959-4246.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R6 shares, may also be purchased, redeemed or exchanged on any business day through our website at
www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Investor
Class shares of the Fund are offered only to grandfathered investors.
Class A, AX and CX shares of the Fund are closed to new investors. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve
shares and additional investments for Class AX and CX shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
With
respect to Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R6 shares, the minimum
initial investment is $1 million, unless such investment is made by (i) an investment company, as defined under the Investment Company
Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate at least $100 million
in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case there is no minimum initial
investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The
Fund’s distributions primarily are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor
or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over
another investment. Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The
Fund’s investment objective is to provide current income consistent with preservation of capital and liquidity. The Fund’s
investment objective may be changed by the Board without shareholder approval.
The
Fund invests at least 99.5% of its total assets in cash, Government Securities,
and repurchase agreements collateralized by cash or Government Securities. In addition, at least 80% of the Fund’s net assets (plus
any borrowings for investment purposes) will be invested, under normal circumstances, in Government Securities and/or repurchase
3 Invesco
Government Money Market Fund
agreements that
are collateralized by Government Securities. In contrast to the Fund’s 99.5% policy, the Fund’s 80% policy does not include
cash or repurchase agreements collateralized by cash. Government Security generally means any security issued or guaranteed as to principal
or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the government of the
United States.
The
Fund is a Government Money Market Fund as defined by Rule 2a-7.
As permitted by Rule 2a-7, the Fund seeks to maintain a stable price of $1.00 per share by using the amortized cost method to value
portfolio securities and rounding the share value to the nearest cent. The Fund invests in conformity with SEC rules and regulation requirements
for money market funds for the quality, maturity, diversification and liquidity of investments. The Fund invests only in U.S. dollar-denominated
securities maturing within 397 calendar days of the date of purchase, with certain exceptions permitted by applicable regulations.
The Fund maintains a dollar-weighted average portfolio maturity of no more than 60 calendar days, and a dollar-weighted average life
to maturity of portfolio securities of not more than 120 calendar days (determined without reference to exceptions regarding interest
rate adjustments). The Fund will limit investments to those securities that are Eligible Securities as defined by applicable regulations
at the time of purchase. Eligible Securities are (i) Government Securities, (ii) shares of other money market funds, and (iii) securities
determined to present minimal credit risks by Invesco pursuant to guidelines approved by the Fund's Board.
In
selecting securities for the Fund’s portfolio, the portfolio managers focus
on securities that offer safety, liquidity, and a competitive yield.
The
portfolio managers normally hold portfolio securities to maturity, but may
sell a particular security when they deem it advisable, such as when market or credit factors materially change.
The
Fund may, from time to time, take temporary defensive positions by holding
cash, shortening the Fund’s dollar-weighted average portfolio maturity or investing in other securities that are Eligible Securities
for purchase by money market funds as described in the Fund’s Statement of Additional Information (SAI), in anticipation of or
in response to adverse market, economic, political or other conditions. If the Fund’s portfolio managers do so, different factors
could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Money
Market Fund Risk.
You could lose money investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot
guarantee it will do so. The share price of money market funds can fall below the $1.00 share price. The Fund’s sponsor is not
required to reimburse the Fund for losses, and you should not rely on or expect that the sponsor will enter into support agreements or
take other actions to provide financial support to the Fund or maintain the Fund’s $1.00 share price at any time, including during
periods of market stress. The credit quality of the Fund’s holdings can change rapidly in certain markets, and the default of a
single holding could have an adverse impact on the Fund’s share price. The Fund’s share price can also be negatively affected
during periods of high redemption pressures, illiquid markets, and/or significant market volatility.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact
on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the proceeds
of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments may decline. Changes
in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S. government’s
inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing financial or economic
conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s debt limit
may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including in the U.S.
government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund, including its
operations, universe of potential investment options, and return potential, and could also result in higher than normal redemptions by
shareholders, which could potentially increase the Fund’s transaction costs and potentially lower the Fund’s performance
returns.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When
4 Invesco
Government Money Market Fund
markets perform
well, there can be no assurance that specific investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Repurchase
Agreement Risk.
If the seller of a repurchase agreement defaults or otherwise does not fulfill its obligations, the Fund may incur delays and losses arising
from selling the underlying securities, enforcing its rights, or declining collateral value.
The
Fund will not enter into a repurchase agreement that will cause more
than 5% of its total assets to be subject to repurchase agreements maturing in more than seven calendar days. Subject to the portfolio
requirements of Rule 2a-7, there is no limit on the amount of the Fund’s assets that may be subject to repurchase agreements of
seven days or less.
Yield
Risk. The Fund’s yield will vary as the short-term
securities in its portfolio mature or are sold and the proceeds are reinvested in other securities. When interest rates are very low or
negative, the Fund may not be able to maintain a positive yield or pay Fund expenses out of current income without impairing the Fund’s
ability to maintain a stable net asset value. Additionally, inflation may outpace and diminish investment returns over time. Recent and
potential future changes in monetary policy made by central banks and/or their governments may affect interest rates.
Floating
and Variable Rate Obligations Risk. Some fixed-income securities
have variable or floating interest rates that provide for a periodic adjustment in the interest rate paid on the securities. The rate
adjustment intervals may be regular and range from daily up to annually, or may be based on an event, such as a change in the stated prevailing
market rate. Floating and variable rate securities may be subject to greater liquidity risk than other debt securities, meaning that there
may be limitations on the Fund’s ability to sell the securities at any given time. Such securities also may lose value.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available to the Adviser in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve
its investment objective.
Portfolio
Holdings
Information concerning
the Fund's portfolio holdings as well as its dollar-weighted average portfolio maturity and dollar-weighted average life to maturity as
of the last business day or subsequent calendar day of the preceding month will be posted on its website no later than five business days
after the end of the month and remain posted on the website for six months thereafter.
A
description of Fund policies and procedures with respect to the disclosure
of Fund portfolio holdings is available in the SAI, which is available at www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.15% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Other Information
Sales
Charges
Purchases of Class C
and CX shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one year of purchase; however,
the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a commission at the time of purchase.
For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred Sales Charges (CDSCs)”
section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
In
order to earn dividends on a purchase of Fund shares on the day of the
purchase, the transfer agent must receive payment in federal funds before 12:00 noon Eastern Time on that day. Purchases made by payments
in other forms, or payments in federal funds received after 12:00 noon Eastern Time but before the close of the customary trading session
of the New York Stock Exchange, will begin to earn dividends on the next business day.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually.
5 Invesco
Government Money Market Fund
The
financial highlights show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations
of the Fund or any of its share classes. The financial highlights table is intended to help you understand the Fund’s financial
performance. Certain information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(realized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or
expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or
expenses
absorbed
|
Ratio
of net
investment
income
(loss)
to
average
net
assets |
|
Invesco
Cash Reserve | |||||||||||
|
Year
ended 02/29/24 |
$1.00
|
$0.05
|
$0.00
|
$0.05
|
$(0.05
) |
$1.00
|
4.89
% |
$4,137,681
|
0.48
% |
0.48
% |
4.80
% |
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
1.99
|
3,129,323
|
0.45
|
0.47
|
2.07
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
2,390,850
|
0.07
|
0.51
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
1.00
|
0.06
|
2,699,457
|
0.23
|
0.50
|
0.05
|
|
Year
ended 02/29/20 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
1.00
|
1.61
|
2,406,243
|
0.51
|
0.51
|
1.55
|
|
| |||||||||||
|
Class
A | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
0.00
|
0.05
|
(0.05
) |
1.00
|
4.84
|
332,871
|
0.53
|
0.53
|
4.75
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
1.95
|
346,709
|
0.50
|
0.52
|
2.02
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
340,937
|
0.07
|
0.56
|
0.01
|
|
Period
ended 02/28/21(d)
|
1.00
|
0.00
|
(0.00
) |
(0.00
) |
(0.00
) |
1.00
|
0.01
|
401,229
|
0.20
(e)
|
0.54
(e)
|
0.08
(e)
|
|
| |||||||||||
|
Class
AX | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
0.00
|
0.05
|
(0.05
) |
1.00
|
4.89
|
61,389
|
0.48
|
0.48
|
4.80
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
1.99
|
64,032
|
0.45
|
0.47
|
2.07
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
70,035
|
0.07
|
0.51
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
1.00
|
0.06
|
74,001
|
0.23
|
0.50
|
0.05
|
|
Year
ended 02/29/20 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
1.00
|
1.61
|
76,169
|
0.51
|
0.51
|
1.55
|
|
| |||||||||||
|
Class
C | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.04
|
0.00
|
0.04
|
(0.04
) |
1.00
|
4.26
|
128,160
|
1.08
|
1.08
|
4.20
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
1.53
|
145,787
|
0.92
|
1.07
|
1.60
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
122,057
|
0.07
|
1.11
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
1.00
|
0.02
|
144,331
|
0.23
|
1.11
|
0.05
|
|
Year
ended 02/29/20 |
1.00
|
0.01
|
0.00
|
0.01
|
(0.01
) |
1.00
|
0.85
|
43,478
|
1.26
|
1.26
|
0.80
|
|
| |||||||||||
|
Class
CX | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.04
|
0.00
|
0.04
|
(0.04
) |
1.00
|
4.11
|
180
|
1.23
|
1.23
|
4.05
|
|
Year
ended 02/28/23 |
1.00
|
0.01
|
(0.00
) |
0.01
|
(0.01
) |
1.00
|
1.42
|
222
|
1.01
|
1.22
|
1.51
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
244
|
0.07
|
1.26
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
1.00
|
0.02
|
369
|
0.29
|
1.25
|
(0.01
) |
|
Year
ended 02/29/20 |
1.00
|
0.01
|
0.00
|
0.01
|
(0.01
) |
1.00
|
0.85
|
507
|
1.26
|
1.26
|
0.80
|
|
| |||||||||||
|
Class
R | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
0.00
|
0.05
|
(0.05
) |
1.00
|
4.63
|
190,022
|
0.73
|
0.73
|
4.55
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
1.78
|
180,897
|
0.66
|
0.72
|
1.86
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
159,912
|
0.07
|
0.76
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
1.00
|
0.04
|
183,057
|
0.22
|
0.74
|
0.06
|
|
Year
ended 02/29/20 |
1.00
|
0.01
|
0.00
|
0.01
|
(0.01
) |
1.00
|
1.35
|
32,297
|
0.76
|
0.76
|
1.30
|
|
| |||||||||||
|
Class
Y | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
0.00
|
0.05
|
(0.05
) |
1.00
|
5.05
|
338,954
|
0.33
|
0.33
|
4.95
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
2.14
|
200,876
|
0.31
|
0.32
|
2.21
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
67,999
|
0.07
|
0.36
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
1.00
|
0.08
|
55,813
|
0.21
|
0.35
|
0.07
|
|
Year
ended 02/29/20 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
1.00
|
1.76
|
42,686
|
0.36
|
0.36
|
1.70
|
|
| |||||||||||
|
Investor
Class | |||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
0.00
|
0.05
|
(0.05
) |
1.00
|
5.05
|
186,118
|
0.33
|
0.33
|
4.95
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
2.14
|
145,977
|
0.31
|
0.32
|
2.21
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
120,491
|
0.07
|
0.36
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
1.00
|
0.08
|
114,665
|
0.21
|
0.35
|
0.07
|
|
Year
ended 02/29/20 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
1.00
|
1.76
|
111,208
|
0.36
|
0.36
|
1.70
|
|
| |||||||||||
6 Invesco
Government Money Market Fund
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(realized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or
expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or
expenses
absorbed
|
Ratio
of net
investment
income
(loss)
to
average
net
assets |
|
Class
R6 | |||||||||||
|
Year
ended 02/29/24 |
$1.00
|
$0.05
|
$0.00
|
$0.05
|
$(0.05
) |
$1.00
|
5.14
% |
$3,314
|
0.24
% |
0.24
% |
5.04
% |
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
1.00
|
2.21
|
268
|
0.18
|
0.18
|
2.34
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
)(c)
|
0.00
|
(0.00
) |
1.00
|
0.01
|
126
|
0.07
|
0.27
|
0.01
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
1.00
|
0.10
|
127
|
0.18
|
0.31
|
0.10
|
|
Year
ended 02/29/20 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
1.00
|
1.81
|
20
|
0.32
|
0.32
|
1.74
|
|
| |||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and does not include sales charges
and is not annualized for periods less than
one
year, if applicable. |
|
(c)
|
Net
gains (losses) on securities (both realized and unrealized) per share may not correlate with the Fund’s net realized and unrealized
gain (loss) due to timing of shareholder transactions in
relation
to the fluctuating market values of the Fund’s investments. |
|
(d)
|
Commencement
date of May 15, 2020. |
|
(e)
|
Annualized.
|
7 Invesco
Government Money Market Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year*;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
*As a money market
fund, the fund's average return is generally lower than 5%.
|
Invesco
Cash Reserve |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.52%
|
9.24%
|
14.18%
|
19.34%
|
24.73%
|
30.37%
|
36.26%
|
42.42%
|
48.86%
|
55.59%
|
|
End
of Year Balance |
$10,452.00
|
$10,924.43
|
$11,418.21
|
$11,934.31
|
$12,473.74
|
$13,037.55
|
$13,626.85
|
$14,242.78
|
$14,886.55
|
$15,559.42
|
|
Estimated
Annual Expenses |
$49.08
|
$51.30
|
$53.62
|
$56.05
|
$58.58
|
$61.23
|
$63.99
|
$66.89
|
$69.91
|
$73.07
|
|
| ||||||||||
|
Class
A |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
0.53%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.47%
|
9.14%
|
14.02%
|
19.12%
|
24.44%
|
30.00%
|
35.81%
|
41.88%
|
48.22%
|
54.85%
|
|
End
of Year Balance |
$10,447.00
|
$10,913.98
|
$11,401.83
|
$11,911.49
|
$12,443.93
|
$13,000.17
|
$13,581.28
|
$14,188.36
|
$14,822.58
|
$15,485.15
|
|
Estimated
Annual Expenses |
$54.18
|
$56.61
|
$59.14
|
$61.78
|
$64.54
|
$67.43
|
$70.44
|
$73.59
|
$76.88
|
$80.32
|
|
| ||||||||||
|
Class
AX |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
0.48%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.52%
|
9.24%
|
14.18%
|
19.34%
|
24.73%
|
30.37%
|
36.26%
|
42.42%
|
48.86%
|
55.59%
|
|
End
of Year Balance |
$10,452.00
|
$10,924.43
|
$11,418.21
|
$11,934.31
|
$12,473.74
|
$13,037.55
|
$13,626.85
|
$14,242.78
|
$14,886.55
|
$15,559.42
|
|
Estimated
Annual Expenses |
$49.08
|
$51.30
|
$53.62
|
$56.05
|
$58.58
|
$61.23
|
$63.99
|
$66.89
|
$69.91
|
$73.07
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
1.08%
|
1.08%
|
1.08%
|
1.08%
|
1.08%
|
1.08%
|
1.08%
|
1.08%
|
0.48%
|
0.48%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.92%
|
7.99%
|
12.22%
|
16.62%
|
21.19%
|
25.94%
|
30.88%
|
36.01%
|
42.16%
|
48.59%
|
|
End
of Year Balance |
$10,392.00
|
$10,799.37
|
$11,222.71
|
$11,662.64
|
$12,119.82
|
$12,594.92
|
$13,088.64
|
$13,601.71
|
$14,216.51
|
$14,859.10
|
|
Estimated
Annual Expenses |
$110.12
|
$114.43
|
$118.92
|
$123.58
|
$128.43
|
$133.46
|
$138.69
|
$144.13
|
$66.76
|
$69.78
|
|
| ||||||||||
|
Class
CX2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
1.23%
|
1.23%
|
1.23%
|
1.23%
|
1.23%
|
1.23%
|
1.23%
|
1.23%
|
0.48%
|
0.48%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.77%
|
7.68%
|
11.74%
|
15.95%
|
20.32%
|
24.86%
|
29.57%
|
34.45%
|
40.53%
|
46.88%
|
|
End
of Year Balance |
$10,377.00
|
$10,768.21
|
$11,174.17
|
$11,595.44
|
$12,032.59
|
$12,486.22
|
$12,956.95
|
$13,445.43
|
$14,053.16
|
$14,688.36
|
|
Estimated
Annual Expenses |
$125.32
|
$130.04
|
$134.95
|
$140.03
|
$145.31
|
$150.79
|
$156.48
|
$162.37
|
$66.00
|
$68.98
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.27%
|
8.72%
|
13.36%
|
18.20%
|
23.25%
|
28.51%
|
34.00%
|
39.72%
|
45.69%
|
51.91%
|
|
End
of Year Balance |
$10,427.00
|
$10,872.23
|
$11,336.47
|
$11,820.54
|
$12,325.28
|
$12,851.57
|
$13,400.33
|
$13,972.52
|
$14,569.15
|
$15,191.25
|
|
Estimated
Annual Expenses |
$74.56
|
$77.74
|
$81.06
|
$84.52
|
$88.13
|
$91.90
|
$95.82
|
$99.91
|
$104.18
|
$108.63
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.67%
|
9.56%
|
14.68%
|
20.04%
|
25.65%
|
31.52%
|
37.66%
|
44.09%
|
50.82%
|
57.86%
|
|
End
of Year Balance |
$10,467.00
|
$10,955.81
|
$11,467.45
|
$12,002.98
|
$12,563.52
|
$13,150.24
|
$13,764.36
|
$14,407.16
|
$15,079.97
|
$15,784.20
|
|
Estimated
Annual Expenses |
$33.77
|
$35.35
|
$37.00
|
$38.73
|
$40.53
|
$42.43
|
$44.41
|
$46.48
|
$48.65
|
$50.93
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
0.24%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.76%
|
9.75%
|
14.97%
|
20.44%
|
26.17%
|
32.18%
|
38.47%
|
45.06%
|
51.96%
|
59.19%
|
|
End
of Year Balance |
$10,476.00
|
$10,974.66
|
$11,497.05
|
$12,044.31
|
$12,617.62
|
$13,218.22
|
$13,847.41
|
$14,506.55
|
$15,197.06
|
$15,920.44
|
|
Estimated
Annual Expenses |
$24.57
|
$25.74
|
$26.97
|
$28.25
|
$29.59
|
$31.00
|
$32.48
|
$34.02
|
$35.64
|
$37.34
|
|
| ||||||||||
8 Invesco
Government Money Market Fund
|
Investor
Class |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Operating Expense Ratio1
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
0.33%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.67%
|
9.56%
|
14.68%
|
20.04%
|
25.65%
|
31.52%
|
37.66%
|
44.09%
|
50.82%
|
57.86%
|
|
End
of Year Balance |
$10,467.00
|
$10,955.81
|
$11,467.45
|
$12,002.98
|
$12,563.52
|
$13,150.24
|
$13,764.36
|
$14,407.16
|
$15,079.97
|
$15,784.20
|
|
Estimated
Annual Expenses |
$33.77
|
$35.35
|
$37.00
|
$38.73
|
$40.53
|
$42.43
|
$44.41
|
$46.48
|
$48.65
|
$50.93
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
9 Invesco
Government Money Market Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC monthly on Form N-MFP.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-MFP, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Government Money Market Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
GMKT-PRO-1
|
Prospectus
June 28, 2024
Class:
A (AMHYX), C (AHYCX), Investor (HYINX), Y (AHHYX), R5 (AHIYX), R6 (HYIFX)
Invesco
High Yield Fund
Investor
Class shares of the Fund are offered only to grandfathered investors.
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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6
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-22
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Back
Cover |
Invesco
High Yield Fund
Fund Summary
Investment
Objective(s)
The Fund's investment
objective is total return through growth of capital and current income.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
|
Class:
|
A
|
C
|
Y
|
Investor
|
R5
|
R6
|
|
Management
Fees |
0.54
% |
0.54
% |
0.54
% |
0.54
% |
0.54
% |
0.54
% |
|
| ||||||
|
Distribution
and/or Service (12b-1) Fees |
0.25
|
1.00
|
None
|
0.25
|
None
|
None
|
|
| ||||||
|
Other
Expenses |
0.24
|
0.24
|
0.24
|
0.24
|
0.17
|
0.10
|
|
| ||||||
|
Acquired
Fund Fees and Expenses |
0.02
|
0.02
|
0.02
|
0.02
|
0.02
|
0.02
|
|
| ||||||
|
Total
Annual Fund Operating Expenses |
1.05
|
1.80
|
0.80
|
1.05
|
0.73
|
0.66
|
|
| ||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 148%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in debt securities that are determined
to be below investment grade quality and in derivatives and other instruments that have economic characteristics similar to such securities.
These types of securities are commonly referred to as junk bonds. Investment grade securities are: (i) securities rated BBB- or higher
by S&P Global Ratings (S&P) or Baa3 or higher by Moody’s Investors Service, Inc. (Moody’s) or an equivalent rating
by another nationally recognized statistical rating organization (NRSRO), (ii) securities with comparable short-term NRSRO ratings, or
(iii) unrated securities determined by Invesco Advisers, Inc. (Invesco or the Adviser) to be of comparable quality, each at the time of
purchase. If two or more NRSROs have assigned different ratings to a security, the Adviser uses the lowest rating assigned.
The
Fund will principally invest in junk bonds rated B or above by an NRSRO
or, if unrated, deemed to be of comparable quality by the Adviser.
The
Fund may invest in preferred stocks and convertible securities, which
are securities that generally pay interest and may be converted into common stock.
The
Fund may invest up to 25% of its net assets in foreign securities. With
regard to foreign security holdings, up to 15% of the Fund’s net assets may be in securities of issuers located in emerging markets
countries, i.e., those that are generally in the early stages of their industrial cycles. The Fund may also invest in securities not considered
foreign securities that carry foreign credit exposure.
The
Fund may purchase mortgage-backed and asset-backed securities such
as collateralized mortgage obligations (CMOs), collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) of any
rating. The Fund may invest up to 15% of its net assets in illiquid or thinly traded investments. The Fund also may invest in securities
that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended.
The Fund may also purchase municipal securities. The Fund’s investments may include securities that do not produce immediate cash
income, such as zero coupon securities and payment-in-kind securities. The Fund may also invest, subject to an overall 15% limit on loans,
in loan participations or assignments.
The
Fund may also invest in real estate investment trusts (REITs) and in the
securities of other investment companies, including ETFs.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
The
Fund can use swap contracts, including interest rate swaps, to seek
to hedge or adjust its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to gain or reduce
exposure to an asset class or a particular issue. The Fund can further use swap
1 Invesco
High Yield Fund
contracts, including
credit default index swaps, to seek to hedge credit risk or take a position on a basket of credit entities and to gain or reduce exposure
to an asset class or a particular issue; and use total return swaps to gain exposure to a reference asset.
The
Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage
interest rate risk; currency options to manage currency exposure; and options on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures, to increase
or reduce its exposure to interest rate changes. The Fund can also use currency futures contracts and/or forward foreign currency contracts
to seek to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated.
In
selecting securities for the Fund’s portfolio, the Adviser focuses on securities
that it believes have favorable prospects for high current income and the possibility of growth of capital. The Adviser conducts a bottom-up
fundamental analysis of an issuer before its securities are purchased by the Fund. The fundamental analysis involves an evaluation by
a team of credit analysts of an issuer’s financial statements in order to assess its financial condition. The credit analysts also
assess the ability of an issuer to reduce its leverage (i.e., the amount of borrowed debt).
The
bottom-up fundamental analysis is supplemented by an ongoing review
of the securities’ relative value compared with other junk bonds, and a top-down analysis of sector and macro-economic trends,
such as changes in interest rates.
The
portfolio managers attempt to control the Fund’s risk by limiting the portfolio’s
assets that are invested in any one security, and by diversifying the portfolio’s holdings over a number of different industries.
Although the Fund is actively managed, it is reviewed regularly against its style-specific benchmark index (the Bloomberg U.S. Corporate
High Yield 2% Issuer Cap Index) to assess the portfolio’s relative risk and its positioning.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality, or general liquidity needs of the Fund.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and environmental, social and governance (“ESG”) considerations. Credit quality analysis for
certain issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and
2 Invesco
High Yield Fund
the
possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally may be subject to less stringent
regulations than U.S. companies, including financial reporting requirements and auditing and accounting controls, and may therefore be
more susceptible to fraud or corruption. There may be less public information available about foreign companies than U.S. companies, making
it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure, foreign securities risk also
involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities denominated in such foreign
currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates
may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to
evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events,
and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade and therefore considered
to have more speculative characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related securities may have
less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances in interest rate, term,
size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages, which are loans made
to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity risk
is even greater for mortgage pools that include subprime mortgages.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. Liquid securities can become illiquid during periods of market stress. If a significant amount of the Fund’s
securities become illiquid, the Fund may not be able to timely pay redemption proceeds and may need to sell securities at significantly
reduced prices.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that
3 Invesco
High Yield Fund
the
counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the
derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created
by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund
sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying
asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid
than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price.
This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions.
Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s
ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example, derivatives used for
hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse
market conditions.
Municipal
Securities Risk. The
risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a
decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate
the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status
of municipal securities.
Exchange-Traded
Funds Risk.
In addition to the risks associated with the underlying assets held by the exchange-traded fund, investments in exchange-traded funds
are subject to the following additional risks: (1) an exchange-traded fund’s shares may trade above or below its net asset value;
(2) an active trading market for the exchange-traded fund’s shares may not develop or be maintained; (3) trading an exchange-traded
fund’s shares may be halted by the listing exchange; (4) a passively managed exchange-traded fund may not track the performance
of the reference asset; and (5) a passively managed exchange-traded fund may hold troubled securities. Investment in exchange-traded funds
may involve duplication of management fees and certain other expenses, as the Fund indirectly bears its proportionate share of any expenses
paid by the exchange-traded funds in which it invests. Further, certain exchange-traded funds in which the Fund may invest are leveraged,
which may result in economic leverage, permitting the Fund to gain exposure that is greater than would be the case in an unlevered instrument
and potentially resulting in greater volatility.
REIT
Risk/Real Estate Risk.
Investments in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological
factors that affect property values, rents or occupancies. Shares of real estate related companies, which tend to be small- and mid-cap
companies, may be more volatile and less liquid than larger companies. If a real estate related company defaults on certain types of debt
obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks such as environmental liabilities;
difficulty in valuing and selling the real estate; and economic or regulatory changes.
Zero
Coupon or Pay-In-Kind Securities Risk.
The value, interest rates, and liquidity of non-cash paying instruments, such as zero coupon and pay-in-kind securities, are subject to
greater fluctuation than other types of securities. The higher yields and interest rates on pay-in-kind securities reflect the payment
deferral and increased credit risk associated
with
such instruments and that such investments may represent a higher credit risk than loans that periodically pay interest.
Senior
Loans and Other Loans Risk. Risks associated with an investment
in Senior Loans include credit risk, interest rate risk, liquidity risk, valuation risk and prepayment risk. These risks are typically
associated with debt securities but may be heightened in part because of the limited public information regarding Senior Loans. Senior
Loans generally are floating rate loans, which are subject to interest rate risk as the interest paid on the floating rate loans adjusts
periodically based on changes in widely accepted reference rates. Lack of an active trading market, restrictions on resale, irregular
trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to sell Senior 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. The risk of holding Senior Loans is also directly
tied to the risk of insolvency or bankruptcy of the issuing banks. The value of Senior Loans can be affected by and sensitive to changes
in government regulation and to economic downturns in the United States and abroad. Senior loans are also subject to the risk that a court
could subordinate a senior loan or take other action detrimental to the holders of senior loans. Loans are subject to the risk that the
value of the collateral, if any, securing a loan may decline, be insufficient to meet the obligations of the borrower, or be difficult
to liquidate. Loan investments are often issued in connection with highly leveraged transactions which are subject to greater credit risks
than other investments including a greater possibility that the borrower may default or enter bankruptcy. Highly leveraged loans also
may be less liquid than other loans. These risks could cause the Fund to lose income or principal on a particular investment, which in
turn could affect the Fund’s returns. Newly originated loans (including reissuances and restructured loans) may possess lower levels
of credit document protections than has historically been the case. Accordingly, in the event of default the Fund may experience lower
levels of recoveries than has historically been the norm.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as
part of a credit analysis may affect the Fund’s exposure to certain issuers or industries and may not work as intended. Information
used to evaluate such factors may not be readily available, complete or accurate, and may vary across providers and issuers. There is
no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and
4 Invesco
High Yield Fund
a broad-based securities
market benchmark (in that order). The Fund's past performance
(before and after taxes) is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
1.37%
|
|
Best
Quarter |
June
30, 2020 |
10.36%
|
|
Worst
Quarter |
March
31, 2020 |
-16.02%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
7/11/1978
|
5.26
% |
2.90
% |
2.60
% |
|
Return
After Taxes on Distributions |
|
2.61
|
0.64
|
0.34
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
3.03
|
1.24
|
0.95
|
|
| ||||
|
Class
C |
8/4/1997
|
8.08
|
3.07
|
2.43
|
|
| ||||
|
Class
Y |
10/3/2008
|
9.84
|
4.00
|
3.29
|
|
| ||||
|
Investor
Class |
9/30/2003
|
9.57
|
3.74
|
3.04
|
|
| ||||
|
Class
R5 |
4/30/2004
|
9.92
|
4.15
|
3.36
|
|
| ||||
|
Class
R6 |
9/24/2012
|
9.99
|
4.20
|
3.46
|
|
| ||||
|
Bloomberg
U.S. Corporate High Yield 2% Issuer Cap
Index
(reflects
no deduction for fees, expenses or
taxes)
|
|
13.44
|
5.35
|
4.59
|
|
| ||||
|
Bloomberg
U.S. Aggregate Bond Index (reflects no
deduction
for fees, expenses or taxes) |
|
5.53
|
1.10
|
1.81
|
|
| ||||
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors
who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement
accounts. After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
|
Portfolio
Managers |
Title
|
Length
of Service on the Fund |
|
Niklas
Nordenfelt, CFA |
Portfolio
Manager |
2020
|
|
| ||
|
Rahim
Shad |
Portfolio
Manager |
2021
|
|
| ||
|
Philip
Susser |
Portfolio
Manager |
2021
|
|
| ||
Purchase
and Sale of Fund Shares
You may purchase,
redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246. Shares of the
Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through our
website at www.invesco.com/us
or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Investor
Class shares of the Fund are offered only to grandfathered investors.
The minimum investments for Class A, C, Y and Investor Class shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor
or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over
another investment. Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
5 Invesco
High Yield Fund
Objective(s)
and Strategies
The Fund’s
investment objective is total return through growth of capital and current income. The Fund’s investment objective may be changed
by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in debt securities that are determined to be below investment grade quality and in derivatives
and other instruments that have economic characteristics similar to such securities. These types of securities are commonly referred to
as junk bonds. Investment grade securities are: (i) securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s or
an equivalent rating by another NRSRO, (ii) securities with comparable short-term NRSRO ratings, or (iii) unrated securities determined
by the Adviser to be of comparable quality, each at the time of purchase. If two or more NRSROs have assigned different ratings to a security,
the Adviser uses the lowest rating assigned.
The
Fund will principally invest in junk bonds rated B or above by an NRSRO
or, if unrated, deemed to be of comparable quality by the Adviser.
The
Fund may invest in preferred stocks and convertible securities, which
are securities that generally pay interest and may be converted into common stock.
The
Fund may invest up to 25% of its net assets in foreign securities. With
regard to foreign security holdings, up to 15% of the Fund’s net assets may be in securities of issuers located in emerging markets
countries, i.e., those that are generally in the early stages of their industrial cycles. The Fund may also invest in securities not considered
foreign securities that carry foreign credit exposure.
The
Fund may purchase mortgage-backed and asset-backed securities such
as CMOs, CLOs and CDOs of any rating. The Fund may invest up to 15% of its net assets in illiquid or thinly traded investments. The Fund
also may invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended. The Fund may also purchase municipal securities. The Fund’s investments may include securities that do
not produce immediate cash income, such as zero coupon securities and payment-in-kind securities. Zero coupon securities are debt securities
that do not entitle the holder to any periodic payment of interest prior to maturity or a specified date when the securities begin paying
current interest. Payment-in-kind securities are debt securities that pay interest through the issuance of additional securities. The
Fund may also invest, subject to an overall 15% limit on loans, in loan participations or assignments.
The
Fund may also invest in REITs and in the securities of other investment
companies, including ETFs.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap. The Fund can use swap contracts, including interest rate swaps, to seek to hedge or adjust
its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to gain or reduce exposure to an
asset class or a particular issue. The Fund can further use swap contracts, including credit default index swaps, to seek to hedge credit
risk or take a position on a basket of credit entities and to gain or reduce
exposure to an
asset class or a particular issue; and total return swaps to gain exposure to a reference asset.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage
interest rate risk; currency options to manage currency exposure; and options on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of a futures contract tends
to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both the purchaser
and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are
settled by purchasing an offsetting contract, physically delivering the underlying instrument on the settlement date or paying a cash
settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures, to increase or reduce its
exposure to interest rate changes. The Fund can also use currency futures contracts to hedge against adverse movements in the foreign
currencies in which portfolio securities are denominated.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. The Fund can use forward foreign currency contracts to
hedge against adverse movements in the foreign currencies in which portfolio securities are denominated.
In
selecting securities for the Fund’s portfolio, the Adviser focuses on securities
that it believes have favorable prospects for high current income and the possibility of growth of capital. The Adviser conducts a bottom-up
fundamental analysis of an issuer before its securities are purchased by the Fund. The fundamental analysis involves an evaluation by
a team of credit analysts of an issuer’s financial statements in order to assess its financial condition. The credit analysts also
assess the ability of an issuer to reduce its leverage (i.e., the amount of borrowed debt).
The
bottom-up fundamental analysis is supplemented by an ongoing review
of the securities’ relative value compared with other junk bonds, and a top-down analysis of sector and macro-economic trends,
such as changes in interest rates.
The
portfolio managers attempt to control the Fund’s risk by limiting the portfolio’s
assets that are invested in any one security, and by diversifying the portfolio’s holdings over a number of different industries.
Although the Fund is actively managed, it is reviewed regularly against its style-specific benchmark index (the Bloomberg U.S. Corporate
High Yield 2% Issuer Cap Index) to assess the portfolio’s relative risk and its positioning.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality, or general liquidity needs of the Fund.
6 Invesco
High Yield Fund
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and ESG
considerations. Credit quality analysis for certain
issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance
and
the value of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant
exposure to an impacted country or geographic regions.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market value due to adverse economic, regulatory,
political or company developments than higher rated or investment grade securities. Prices of high yield debt securities tend to be very
volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable time or price,
particularly in times of negative sentiment toward high yield securities.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign
7 Invesco
High Yield Fund
deposits (in which
the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental restrictions such as
exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies, including financial reporting
requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption. Also, there may be less
publicly available information about companies in certain foreign countries than about U.S. companies making it more difficult for the
Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability to recover its assets held
at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt. Trading in many foreign
securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors. Changes in political
and economic factors in one country or region could adversely affect conditions in another country or region. Investments in foreign securities
may also expose the Fund to time-zone arbitrage risk. At times, the Fund may emphasize investments in a particular country or region and
may be subject to greater risks from adverse events that occur in that country or region. Unless the Fund has hedged its foreign currency
exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of
securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline
in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not
always successful. For instance, currency forward contracts, if used by the Fund, could reduce performance if there are unanticipated
changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection, investigation and enforcement
capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted by
audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market
securities, securities
regulation, title to securities, and shareholder rights may change quickly and unpredictably. Emerging market countries also may have
less developed legal systems allowing for enforcement of private property rights and/or redress for injuries to private property (including
bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local
companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking). Certain
governments may require approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign
investors. The ability to bring and enforce actions in emerging market countries, or to obtain information needed to pursue or enforce
such actions, may be limited and shareholder claims may be difficult or impossible to pursue. In addition, the taxation systems at the
federal, regional and local levels in emerging market countries may be less transparent and inconsistently enforced, and subject to sudden
change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt securities, which are not registered for sale pursuant to an exemption from
registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more
8 Invesco
High Yield Fund
senior securities.
For this reason, the value of preferred securities will usually react more strongly than bonds and other debt securities to actual or
perceived changes in the company’s financial condition or prospects. Preferred securities may be less liquid than many other securities,
such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be converted into or exchanged for
a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible
debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed.
Some convertible debt securities may be considered “equity equivalents” because of the feature that makes them convertible
into common stock. Since a convertible security derives a portion of its value from the common stock into which it may be converted, a
convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock. In addition,
certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain
triggering events. These convertible securities are subject to an increased risk of loss and are generally subordinate in rank to other
debt obligations of the issuer. Convertible securities may be rated below investment grade and therefore considered to have more speculative
characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid
privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. An investment may be illiquid due to a lack of trading volume in the investment or if the investment is privately
placed and not traded in any public market or is otherwise restricted from trading. Liquid securities can become illiquid during periods
of market stress. If a significant amount of the Fund’s securities become illiquid, the Fund may not be able to timely pay redemption
proceeds and may need to sell securities at significantly reduced prices.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often
9 Invesco
High Yield Fund
financial
institutions that may be unable or unwilling to buy or sell derivatives during times of financial or market stress. Derivative instruments
may therefore be less liquid than more traditional investments and the Fund may be unable to sell or exit its derivative positions at
a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating
its derivative positions. To the extent that the Fund is unable to exit a derivative position because of market illiquidity, the Fund
may not be able to prevent further losses of value in its derivatives holdings and the liquidity of the Fund and its ability to meet redemption
requests may be impaired to the extent that a substantial portion of the Fund’s otherwise liquid assets must be used as margin.
Another consequence of illiquidity is that the Fund may be required to hold a derivative instrument to maturity and take or make delivery
of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a security denominated in a foreign currency or protect against possible losses
from changes in the relative value of the U.S. dollar against a foreign currency. They are subject to the risk that anticipated currency
movements will not be accurately predicted or do not correspond accurately to changes in the value of the fund's holdings, which could
result in losses and additional transaction costs. The use of forward contracts could reduce performance if there are unanticipated changes
in currency prices. A contract to sell a foreign currency would limit any potential gain that might be realized if the value of the currency
increases. A forward foreign currency contract may also result in losses in the event of a default or bankruptcy of the counterparty.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted for clearing to a central clearing house counterparty, and the Fund faces
the central clearing house counterparty by means of an account with a futures commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited by the
requirements for taxation of the Fund as a regulated investment company.
Municipal
Securities Risk.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Municipal obligations may be more susceptible to downgrades or defaults during recessions or similar periods of economic stress. Municipal
securities structured as revenue bonds are generally not backed by the taxing power of the issuing municipality but rather the revenue
from the particular project or entity for which the bonds were issued. If the Internal Revenue Service determines that an issuer of a
municipal security has not complied with applicable tax requirements, interest from the security could be treated as taxable, which could
result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that
reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal
or state tax status of municipal securities.
Exchange-Traded
Funds Risk. In addition to the risks associated with the
underlying assets held by the exchange-traded fund, investments in exchange-traded funds are subject to the following additional risks:
(1) the market price of an exchange-traded fund’s shares may trade above or below its net asset value; (2) an active trading market
for the exchange-traded fund’s shares may not develop or be maintained; (3) trading an exchange-traded fund’s shares may
be halted if the listing exchange’s officials deem such action appropriate; (4) a passively managed exchange-traded fund may not
accurately track the performance of the reference asset; and (5) a passively managed exchange-traded fund would not necessarily sell a
security because the issuer of the security was in financial trouble unless the security is removed from the index that the exchange-traded
fund seeks to track. Investment in exchange-traded funds may involve duplication of management fees and certain other expenses, as the
Fund indirectly bears its proportionate share of any expenses paid by the exchange-traded funds in which it invests. Further, certain
exchange-traded funds in which the Fund may invest are leveraged. Investing in leveraged exchange-traded funds may result in economic
leverage, which does not result in the possibility of the Fund incurring obligations beyond its investments, but nonetheless permits the
Fund to gain exposure that is greater than would be the case in an unlevered instrument, which can result in greater volatility.
REIT
Risk/Real Estate Risk. Investments
in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological factors that
affect property values, rents or occupancies. Real estate companies, including REITs or similar structures,
10 Invesco
High Yield Fund
tend to be small-
and mid-cap companies and their shares may be more volatile and less liquid than larger companies. The value of investments in real estate
related companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage and financial
covenants related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related company
defaults on certain types of debt obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks
such as environmental liabilities; difficulty in valuing and selling the real estate; and economic or regulatory changes.
Zero
Coupon or Pay-In-Kind Securities Risk.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and less liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular interest payment periods. Prices on non-cash-paying instruments
may be more sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances
than cash-paying securities with similar credit ratings, and thus may be more speculative. Investors may purchase zero coupon and pay-in-kind
securities at a price below the amount payable at maturity. Because such securities do not entitle the holder to any periodic payments
of interest prior to maturity, this prevents any reinvestment of interest payments at prevailing interest rates if prevailing interest
rates rise. The higher yields and interest rates on pay-in-kind securities reflect the payment deferral and increased credit risk associated
with such instruments and that such investments may represent a higher credit risk than coupon loans. Pay-in-kind securities may have
a potential variability in valuations because their continuing accruals require continuing judgments about the collectability of the deferred
payments and the value of any associated collateral. Special tax considerations are associated with investing in certain lower-grade securities,
such as zero coupon or pay-in-kind securities.
Senior
Loans and Other Loans Risk. There are a number of risks associated
with an investment in Senior Loans including credit risk, interest rate risk, liquidity risk, valuation risk and prepayment risk. These
risks are typically associated with debt securities but may be heightened in part because of the limited public information regarding
Senior Loans. Senior Loans generally are floating rate loans, which are subject to interest rate risk as the interest paid on the floating
rate loans adjusts periodically based on changes in widely accepted reference rates. Lack of an active trading market, restrictions on
resale, irregular trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to
sell Senior 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. The risk of holding Senior Loans
is also directly tied to the risk of insolvency or bankruptcy of the issuing banks. The value of Senior Loans can be affected by, and
is sensitive to, changes in government regulation and to economic downturns in the United States and abroad. These risks could cause the
Fund to lose income or principal on a particular investment, which in turn could affect the Fund’s returns. Newly originated loans
(including reissuances and restructured loans) may possess lower levels of credit document protections than has historically been the
case. Accordingly, in the event of default the Fund may experience lower levels of recoveries than has historically been the norm.
In
addition to the risks typically associated with debt securities, senior loans
are also subject to the risk that a court could subordinate a senior loan, which typically holds a senior position in the capital structure
of a borrower, to presently existing or future indebtedness or take other action detrimental to the holders of senior loans. Loans usually
have mandatory and optional prepayment provisions. If a borrower prepays a loan, the Fund will have to reinvest the proceeds in other
loans or financial assets that may pay lower rates of return.
Loans
are subject to the risk that the value of the collateral, if any, securing
a loan may decline, be insufficient to meet the obligations of the borrower, or be difficult to liquidate. In the event of a default,
the Fund may have difficulty collecting on any collateral and would not have the ability to collect on any collateral for an uncollateralized
loan. In addition, the lenders’ security interest or their enforcement of their security under the loan agreement may be found
by a court to be invalid or the collateral may be used to pay other outstanding obligations of the borrower. The Fund’s access
to collateral, if any, may be limited by bankruptcy, other insolvency laws, or by the type of loan the Fund has purchased. As a result,
a collateralized loan may not be fully collateralized and can decline significantly in value.
Loan
investments are often issued in connection with highly leveraged transactions.
Such transactions include leveraged buyout loans, leveraged recapitalization loans, and other types of acquisition financing. These obligations
are subject to greater credit risks than other investments including a greater possibility that the borrower may default or enter bankruptcy.
Highly leveraged loans also may be less liquid than other loans. If the Fund voluntarily or involuntarily sold those types of loans, it
might not receive the full value it expected.
Due
to restrictions on transfers in loan agreements and the nature of the
private syndication of loans including, for example, the lack of publicly-available information, some loans are not as easily purchased
or sold as publicly-traded securities. Some loans are illiquid, which may make it difficult for the Fund to value them or dispose of them
at an acceptable price when it wants to. Additionally, valuation of Senior Loans may require greater research due to limited public information
available and elements of judgment may play a greater role in valuation since there may be a lack of objective data available. The market
price of investments in floating rate loans is expected to be less affected by changes in interest rates than fixed-rate investments because
floating rate loans pay a floating rate of interest that will fluctuate as market interest rates do and therefore should more closely
track market movements in interest rates.
Direct
investments in loans and, to a lesser degree, investments in participation
interests in or assignments of loans may be limited. A limited availability of loans could reduce the amount of attractive investments
for the Fund. If market demand for loans increases, the interest paid by loans that the Fund holds may decrease.
Compared
to securities and to certain other types of financial assets, purchases
and sales of loans take relatively longer to settle. This extended settlement process can (i) increase the counterparty credit risk borne
by the Fund; (ii) leave the Fund unable to timely vote, or otherwise act with respect to, loans it has agreed to purchase; (iii) delay
the Fund from realizing the proceeds of a sale of a loan; (iv) inhibit the Fund’s ability to re-sell a loan that it has agreed
to purchase if conditions change (leaving the Fund more exposed to price fluctuations); (v) prevent the Fund from timely collecting principal
and interest payments; and (vi) expose the Fund to adverse tax or regulatory consequences. To the extent the extended loan settlement
process gives rise to short-term liquidity needs, such as the need to satisfy redemption requests, the Fund may hold cash, sell investments
or temporarily borrow from banks or other lenders. If the Fund undertakes such measures, the Fund’s ability to pay redemption proceeds
in a timely manner, as well as the Fund’s performance, may be adversely affected.
If
the Fund invests in a loan via a participation, the Fund will be exposed to
the ongoing counterparty risk of the entity providing exposure to the loan (and, in certain circumstances, such entity’s credit
risk) in addition to the exposure the Fund has to the creditworthiness of the borrower. The terms of the participation may not entitle
the Fund to all rights of a direct lender under the loan (for example, with respect to consent, voting or enforcement rights). Therefore,
the Fund’s rights under a participation interest for a particular loan may be more limited than the rights of the original lender
or an investor who acquires an assignment of that loan. Where the Fund invests in a loan via a participation, the Fund generally will
have no right of
11 Invesco
High Yield Fund
direct recourse
against the borrower or ability to otherwise directly enforce the terms of the loan agreement.
In
certain circumstances, loans may not be deemed to be securities, and
in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have the protection of the anti-fraud provisions
of the federal securities laws, as would be the case for bonds or stocks. Instead, in such cases, lenders generally rely on the contractual
provisions in the loan agreement itself, and common-law fraud protections under applicable state law.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary, and not every ESG factor may be identified or evaluated for every investment, and not every investment
or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as part of a credit analysis may affect the Fund’s
exposure to certain issuers or industries and may not work as intended. The Fund may underperform other funds that do not incorporate
ESG factors or that use a different methodology to identify and/or incorporate ESG factors. Information used to evaluate such factors
may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined characteristic,
which could negatively impact the ability to accurately assess credit quality, which could negatively impact the Fund’s performance.
There is no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in high brokerage costs, which may lower the Fund’s actual return. Active trading
also may increase the proportion of the Fund’s gains that are short term, which are taxed at a higher rate than long term
gains.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available to the Adviser in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve
its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund's SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps markets.
The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies or
this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.54% of the Fund’s average daily net assets, after
fee waiver and/or expense reimbursement, if any. Effective July 1, 2024, the Fund's contractual management fee is calculated at the following
annual rates, based on the Fund's average daily net assets: 0.625% on the first $200 million, 0.55% on the next $300 million, 0.50% on
the next $500 million, 0.45% on the next $4 billion, and 0.43% of amount over $5 billion. Prior to July 1, 2024, the Adviser received
a fee from the Fund, calculated at the annual rate of 0.625% of the first $200 million, 0.55% of the next $300 million, 0.50% of the next
$500 million, and 0.45% of the amount over $1 billion of average daily net assets.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Niklas
Nordenfelt, CFA, Portfolio Manager, who has been responsible for the Fund since 2020 and has been associated with Invesco and/or its affiliates
since 2020. From 2003 to 2020, he was associated with Wells Fargo Asset Management where he served as a Managing Director, Senior Portfolio
Manager and Co-Head of US High Yield.
■
Rahim
Shad, Portfolio Manager, who has been responsible for the Fund since 2021 and has been associated with Invesco and/or its affiliates since
2009.
■
Philip
Susser, Portfolio Manager, who has been responsible for the Fund since 2021 and has been associated with Invesco and/or its affiliates
since 2021. From 2001 to 2020, he was associated with Wells Fargo Asset Management where he served as a Senior Portfolio Manager and co-head
of US High Yield.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers'
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 4.25% initial sales charge as listed under the heading “Category II Initial
12 Invesco
High Yield Fund
Sales Charges”
in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the prospectus. Purchases
of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one year of purchase; however,
the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a commission at the time of purchase.
For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred Sales Charges (CDSCs)”
section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
13 Invesco
High Yield Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(both
realized
and
unrealized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | ||||||||||||||
|
Year
ended 02/29/24 |
$3.43
|
$0.22
|
$0.06
|
$0.28
|
$(0.22
) |
$—
|
$(0.22
) |
$3.49
|
8.54
% |
$565,075
|
1.03
% |
1.03
% |
6.45
% |
148
% |
|
Year
ended 02/28/23 |
3.81
|
0.17
|
(0.38
) |
(0.21
) |
(0.17
) |
—
|
(0.17
) |
3.43
|
(5.36
) |
556,275
|
1.03
|
1.03
|
4.94
|
87
|
|
Year
ended 02/28/22 |
3.97
|
0.15
|
(0.13
) |
0.02
|
(0.18
) |
—
|
(0.18
) |
3.81
|
0.36
|
640,948
|
1.03
|
1.03
|
3.90
|
88
|
|
Year
ended 02/28/21 |
3.96
|
0.19
|
0.05
|
0.24
|
(0.22
) |
(0.01
) |
(0.23
) |
3.97
|
6.59
|
657,549
|
1.07
|
1.07
|
4.89
|
101
|
|
Year
ended 02/29/20 |
4.05
|
0.21
|
(0.07
) |
0.14
|
(0.23
) |
—
|
(0.23
) |
3.96
|
3.53
|
663,578
|
1.01
|
1.02
|
5.09
|
62
|
|
| ||||||||||||||
|
Class
C | ||||||||||||||
|
Year
ended 02/29/24 |
3.42
|
0.20
|
0.07
|
0.27
|
(0.20
) |
—
|
(0.20
) |
3.49
|
8.05
|
16,838
|
1.78
|
1.78
|
5.70
|
148
|
|
Year
ended 02/28/23 |
3.80
|
0.15
|
(0.38
) |
(0.23
) |
(0.15
) |
—
|
(0.15
) |
3.42
|
(6.10
) |
16,924
|
1.78
|
1.78
|
4.19
|
87
|
|
Year
ended 02/28/22 |
3.96
|
0.12
|
(0.13
) |
(0.01
) |
(0.15
) |
—
|
(0.15
) |
3.80
|
(0.40
) |
22,626
|
1.78
|
1.78
|
3.15
|
88
|
|
Year
ended 02/28/21 |
3.95
|
0.16
|
0.05
|
0.21
|
(0.19
) |
(0.01
) |
(0.20
) |
3.96
|
5.79
|
26,860
|
1.82
|
1.82
|
4.14
|
101
|
|
Year
ended 02/29/20 |
4.04
|
0.18
|
(0.07
) |
0.11
|
(0.20
) |
—
|
(0.20
) |
3.95
|
2.75
|
35,743
|
1.76
|
1.77
|
4.34
|
62
|
|
| ||||||||||||||
|
Class
Y | ||||||||||||||
|
Year
ended 02/29/24 |
3.44
|
0.23
|
0.06
|
0.29
|
(0.23
) |
—
|
(0.23
) |
3.50
|
8.81
|
67,978
|
0.78
|
0.78
|
6.70
|
148
|
|
Year
ended 02/28/23 |
3.82
|
0.18
|
(0.38
) |
(0.20
) |
(0.18
) |
—
|
(0.18
) |
3.44
|
(5.09
) |
42,874
|
0.78
|
0.78
|
5.19
|
87
|
|
Year
ended 02/28/22 |
3.98
|
0.16
|
(0.13
) |
0.03
|
(0.19
) |
—
|
(0.19
) |
3.82
|
0.63
|
45,483
|
0.78
|
0.78
|
4.15
|
88
|
|
Year
ended 02/28/21 |
3.97
|
0.19
|
0.06
|
0.25
|
(0.23
) |
(0.01
) |
(0.24
) |
3.98
|
6.85
|
51,180
|
0.82
|
0.82
|
5.14
|
101
|
|
Year
ended 02/29/20 |
4.07
|
0.22
|
(0.08
) |
0.14
|
(0.24
) |
—
|
(0.24
) |
3.97
|
3.54
|
61,065
|
0.76
|
0.77
|
5.34
|
62
|
|
| ||||||||||||||
|
Investor
Class | ||||||||||||||
|
Year
ended 02/29/24 |
3.43
|
0.22
|
0.06
|
0.28
|
(0.22
) |
—
|
(0.22
) |
3.49
|
8.54
|
56,267
|
1.03
|
1.03
|
6.45
|
148
|
|
Year
ended 02/28/23 |
3.81
|
0.17
|
(0.38
) |
(0.21
) |
(0.17
) |
—
|
(0.17
) |
3.43
|
(5.37
) |
58,755
|
1.03
|
1.03
|
4.94
|
87
|
|
Year
ended 02/28/22 |
3.97
|
0.15
|
(0.13
) |
0.02
|
(0.18
) |
—
|
(0.18
) |
3.81
|
0.36
|
68,375
|
1.03
|
1.03
|
3.90
|
88
|
|
Year
ended 02/28/21 |
3.96
|
0.18
|
0.06
|
0.24
|
(0.22
) |
(0.01
) |
(0.23
) |
3.97
|
6.59
|
74,887
|
1.07
|
1.07
|
4.89
|
101
|
|
Year
ended 02/29/20 |
4.05
|
0.21
|
(0.07
) |
0.14
|
(0.23
) |
—
|
(0.23
) |
3.96
|
3.53
|
80,043
|
1.01
|
1.02
|
5.09
|
62
|
|
| ||||||||||||||
|
Class
R5 | ||||||||||||||
|
Year
ended 02/29/24 |
3.42
|
0.23
|
0.06
|
0.29
|
(0.23
) |
—
|
(0.23
) |
3.48
|
8.87
|
16,389
|
0.71
|
0.71
|
6.77
|
148
|
|
Year
ended 02/28/23 |
3.80
|
0.18
|
(0.37
) |
(0.19
) |
(0.19
) |
—
|
(0.19
) |
3.42
|
(5.08
) |
18,972
|
0.71
|
0.71
|
5.26
|
87
|
|
Year
ended 02/28/22 |
3.96
|
0.17
|
(0.14
) |
0.03
|
(0.19
) |
—
|
(0.19
) |
3.80
|
0.67
|
27,997
|
0.72
|
0.72
|
4.21
|
88
|
|
Year
ended 02/28/21 |
3.94
|
0.20
|
0.06
|
0.26
|
(0.23
) |
(0.01
) |
(0.24
) |
3.96
|
7.21
|
38,676
|
0.74
|
0.74
|
5.22
|
101
|
|
Year
ended 02/29/20 |
4.04
|
0.22
|
(0.07
) |
0.15
|
(0.25
) |
—
|
(0.25
) |
3.94
|
3.75
|
55,520
|
0.68
|
0.69
|
5.42
|
62
|
|
| ||||||||||||||
|
Class
R6 | ||||||||||||||
|
Year
ended 02/29/24 |
3.43
|
0.23
|
0.07
|
0.30
|
(0.24
) |
—
|
(0.24
) |
3.49
|
8.95
|
361,083
|
0.64
|
0.64
|
6.84
|
148
|
|
Year
ended 02/28/23 |
3.81
|
0.19
|
(0.38
) |
(0.19
) |
(0.19
) |
—
|
(0.19
) |
3.43
|
(5.00
) |
71,702
|
0.64
|
0.64
|
5.33
|
87
|
|
Year
ended 02/28/22 |
3.97
|
0.17
|
(0.14
) |
0.03
|
(0.19
) |
—
|
(0.19
) |
3.81
|
0.75
|
80,390
|
0.64
|
0.64
|
4.29
|
88
|
|
Year
ended 02/28/21 |
3.95
|
0.20
|
0.07
|
0.27
|
(0.24
) |
(0.01
) |
(0.25
) |
3.97
|
7.29
|
83,282
|
0.65
|
0.65
|
5.31
|
101
|
|
Year
ended 02/29/20 |
4.05
|
0.22
|
(0.07
) |
0.15
|
(0.25
) |
—
|
(0.25
) |
3.95
|
3.70
|
190,003
|
0.59
|
0.60
|
5.51
|
62
|
|
| ||||||||||||||
|
(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. |
14 Invesco
High Yield Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
(0.47)%
|
3.46%
|
7.55%
|
11.80%
|
16.22%
|
20.81%
|
25.58%
|
30.54%
|
35.70%
|
41.06%
|
|
End
of Year Balance |
$9,953.21
|
$10,346.36
|
$10,755.04
|
$11,179.86
|
$11,621.46
|
$12,080.51
|
$12,557.69
|
$13,053.72
|
$13,569.34
|
$14,105.33
|
|
Estimated
Annual Expenses |
$527.52
|
$106.57
|
$110.78
|
$115.16
|
$119.71
|
$124.44
|
$129.35
|
$134.46
|
$139.77
|
$145.29
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.95%
|
8.06%
|
12.33%
|
16.77%
|
21.38%
|
26.17%
|
31.15%
|
36.33%
|
41.72%
|
47.32%
|
|
End
of Year Balance |
$10,395.00
|
$10,805.60
|
$11,232.42
|
$11,676.10
|
$12,137.31
|
$12,616.73
|
$13,115.09
|
$13,633.14
|
$14,171.65
|
$14,731.43
|
|
Estimated
Annual Expenses |
$107.07
|
$111.30
|
$115.70
|
$120.27
|
$125.02
|
$129.96
|
$135.09
|
$140.43
|
$145.98
|
$151.74
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.80%
|
1.80%
|
1.80%
|
1.80%
|
1.80%
|
1.80%
|
1.80%
|
1.80%
|
1.05%
|
1.05%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.20%
|
6.50%
|
9.91%
|
13.43%
|
17.06%
|
20.81%
|
24.68%
|
28.67%
|
33.75%
|
39.03%
|
|
End
of Year Balance |
$10,320.00
|
$10,650.24
|
$10,991.05
|
$11,342.76
|
$11,705.73
|
$12,080.31
|
$12,466.88
|
$12,865.82
|
$13,374.02
|
$13,902.29
|
|
Estimated
Annual Expenses |
$182.88
|
$188.73
|
$194.77
|
$201.00
|
$207.44
|
$214.07
|
$220.92
|
$227.99
|
$137.76
|
$143.20
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.20%
|
8.58%
|
13.14%
|
17.89%
|
22.84%
|
28.00%
|
33.38%
|
38.98%
|
44.82%
|
50.90%
|
|
End
of Year Balance |
$10,420.00
|
$10,857.64
|
$11,313.66
|
$11,788.83
|
$12,283.96
|
$12,799.89
|
$13,337.49
|
$13,897.66
|
$14,481.36
|
$15,089.58
|
|
Estimated
Annual Expenses |
$81.68
|
$85.11
|
$88.69
|
$92.41
|
$96.29
|
$100.34
|
$104.55
|
$108.94
|
$113.52
|
$118.28
|
|
| ||||||||||
|
Investor
Class |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
1.05%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.95%
|
8.06%
|
12.33%
|
16.77%
|
21.38%
|
26.17%
|
31.15%
|
36.33%
|
41.72%
|
47.32%
|
|
End
of Year Balance |
$10,395.00
|
$10,805.60
|
$11,232.42
|
$11,676.10
|
$12,137.31
|
$12,616.73
|
$13,115.09
|
$13,633.14
|
$14,171.65
|
$14,731.43
|
|
Estimated
Annual Expenses |
$107.07
|
$111.30
|
$115.70
|
$120.27
|
$125.02
|
$129.96
|
$135.09
|
$140.43
|
$145.98
|
$151.74
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.27%
|
8.72%
|
13.36%
|
18.20%
|
23.25%
|
28.51%
|
34.00%
|
39.72%
|
45.69%
|
51.91%
|
|
End
of Year Balance |
$10,427.00
|
$10,872.23
|
$11,336.47
|
$11,820.54
|
$12,325.28
|
$12,851.57
|
$13,400.33
|
$13,972.52
|
$14,569.15
|
$15,191.25
|
|
Estimated
Annual Expenses |
$74.56
|
$77.74
|
$81.06
|
$84.52
|
$88.13
|
$91.90
|
$95.82
|
$99.91
|
$104.18
|
$108.63
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
0.66%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.34%
|
8.87%
|
13.59%
|
18.52%
|
23.66%
|
29.03%
|
34.63%
|
40.47%
|
46.57%
|
52.93%
|
|
End
of Year Balance |
$10,434.00
|
$10,886.84
|
$11,359.33
|
$11,852.32
|
$12,366.71
|
$12,903.43
|
$13,463.44
|
$14,047.75
|
$14,657.42
|
$15,293.55
|
|
Estimated
Annual Expenses |
$67.43
|
$70.36
|
$73.41
|
$76.60
|
$79.92
|
$83.39
|
$87.01
|
$90.79
|
$94.73
|
$98.84
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
15 Invesco
High Yield Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
High Yield Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
HYI-PRO-1
|
Prospectus
June 28, 2024
Class:
A (AGOVX), C (AGVCX), R (AGVRX), Y (AGVYX), Investor (AGIVX), R5 (AGOIX), R6 (AGVSX)
Invesco
Income Fund
Investor
Class shares of the Fund are offered only to grandfathered investors.
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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1
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5
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11
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11
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11
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11
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11
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11
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11
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13
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14
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A-1
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco
Income Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is current income,
and
secondarily, capital appreciation.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
|
Class:
|
A
|
C
|
R
|
Y
|
Investor
|
R5
|
R6
|
|
Management
Fees |
0.46
% |
0.46
% |
0.46
% |
0.46
% |
0.46
% |
0.46
% |
0.46
% |
|
| |||||||
|
Distribution
and/or Service (12b-1)
Fees
|
0.25
|
1.00
|
0.50
|
None
|
0.13
|
None
|
None
|
|
| |||||||
|
Other
Expenses |
0.28
|
0.28
|
0.28
|
0.28
|
0.28
|
0.20
|
0.13
|
|
| |||||||
|
Acquired
Fund Fees and Expenses |
0.01
|
0.01
|
0.01
|
0.01
|
0.01
|
0.01
|
0.01
|
|
| |||||||
|
Total
Annual Fund Operating
Expenses
|
1.00
|
1.75
|
1.25
|
0.75
|
0.88
|
0.67
|
0.60
|
|
| |||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain equal to the Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement in the first year and the Total Annual Fund Operating Expenses thereafter.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 268%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests
primarily in fixed-income securities and in derivatives and other instruments that have economic characteristics similar to such securities.
A significant portion of these securities consists of privately-issued mortgage-backed and asset-backed securities such as commercial
mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS), and collateralized loan obligations (CLOs) of any rating.
The mortgage-backed securities in which the Fund invests could also include mortgage pass-through certificates representing participation
interests in pools of mortgage loans originated by the U.S. Government or private lenders as well as those guaranteed by U.S. Government
agencies such as the Government National Mortgage Association (GNMA), the Federal National Mortgage Association (FNMA) or the Federal
Home Loan Mortgage Corporation (FHLMC).
The
Fund will concentrate (i.e. invest more than 25% of its total
assets) in
securities related to the real estate finance industry, including, without limitation, CMBS, RMBS, real estate investment trusts (REITs),
other real estate-related securities, loans and other instruments that are secured by, or otherwise have exposure to, real estate. The
Fund may, at times, invest substantially more than 25% of its total assets in securities related to the real estate finance industry.
The
Fund invests in below-investment grade securities. Below-investment
grade securities are commonly referred to as junk bonds. A significant portion of the Fund’s investments consists of below-investment
grade securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund may buy or sell a security with payment and delivery taking place in the future. The Fund will
engage in “to be announced” (TBA) transactions, which are transactions in
1 Invesco
Income Fund
which a fund buys
or sells mortgage-backed securities on a forward commitment basis. The Fund also expects to engage in short sales of TBA mortgages, including
short sales on TBA mortgages the Fund does not own. The Fund’s use of TBA transactions results in a form of leverage, which could
increase the volatility of the Fund’s share price.
The
Fund may invest in foreign securities, including securities of issuers located
in emerging markets countries (i.e., those that are generally in the early stages of their industrial cycles), in non-U.S. dollar denominated
securities and in depositary receipts.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
The
Fund can use swap contracts, including interest rate swaps, to seek
to hedge or adjust its exposure to interest rates and to manage duration. The Fund can further use credit default swaps or total return
swaps to manage credit exposure and to manage duration.
The
Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use currency options to manage currency exposure;
and options on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures contracts
and bond futures contracts, to increase or reduce exposure to changes in interest rates and to manage duration.
The
Fund can use forward foreign currency contracts to hedge against adverse
movements in the foreign currencies in which portfolio securities are denominated.
The
Fund may invest in illiquid or thinly traded investments. The Fund may
also invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended.
The
Fund may invest in convertible securities, municipal securities and common
and preferred stock of REITs.
The
portfolio managers seek risk-adjusted returns across the fixed income
spectrum in an effort to provide a high, stable monthly income while providing the opportunity for long term price appreciation. The portfolio
managers use a “top down” analysis of macroeconomic trends combined with a “bottom up” fundamental analysis
of market sub-sectors and individual issuers to seek to continuously create investable information advantages throughout a market cycle.
The portfolio managers will invest opportunistically across a wide range of credit and issuer types to seek to provide relative value
across fixed income.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may
decline
in value. When markets perform well, there can be no assurance that specific investments held by the Fund will rise in value.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related securities may have
less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances in interest rate, term,
size, purpose and borrower characteristics. The Fund
2 Invesco
Income Fund
may
invest in mortgage pools that include subprime mortgages, which are loans made to borrowers with weakened credit histories or with lower
capacity to make timely payments on their mortgages. Liquidity risk is even greater for mortgage pools that include subprime
mortgages. The risks of investing in mortgage- and asset-backed securities will be greater for the Fund than other funds that do not concentrate
in the real estate finance industry.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk. The risks of investing in CLOs will be greater
for the Fund than other funds that do not concentrate in the real estate finance industry.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Real
Estate Finance Industry Concentration Risk.
Investments in real estate related instruments, including
CMBS, RMBS, CLOs and REITs, may be affected by economic, legal, cultural, environmental or technological factors that affect property
values, rents or occupancies of real estate related to the Fund’s holdings. Shares of real estate related companies, which tend
to be small- and mid-cap companies, may be more volatile and less liquid than larger companies. If a real estate related company defaults
on certain types of debt obligations, the Fund may own real estate directly, which involves additional risks such as environmental liabilities;
difficulty in valuing and selling the real estate; and economic or regulatory changes. Because the Fund will concentrate its investments
in the real estate finance industry, the Fund will be subject to increased risks associated with this industry.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions subject the Fund to market risk because the value or yield of a security at delivery may
be more or less than the purchase price or yield generally available when delivery occurs, and counterparty risk because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction. These transactions also have a leveraging effect on the Fund
because the Fund commits to purchase securities that it does not have to pay for until a later date, which increases the Fund’s
overall investment exposure and, as a result, its volatility.
TBA
Transactions Risk.
TBA transactions involve the risk of loss if the securities received are less favorable than what was anticipated by the Fund when entering
into the TBA transaction, or if the counterparty fails to deliver the securities. When the Fund enters into a short sale of a TBA mortgage
it does not own, the Fund may have to purchase deliverable mortgages to settle the short sale at a higher price than anticipated, thereby
causing a loss. As there is no limit on how much the price of mortgage securities can increase, the Fund’s exposure is unlimited.
The Fund may not always be able to purchase mortgage securities to close out the short position at a
particular
time or at an acceptable price. In addition, taking short positions results in a form of leverage, which could increase the volatility
of the Fund’s share price.
Short
Position Risk.
Because the Fund’s potential loss on a short position arises from increases in the value of the asset sold short, the Fund will
incur a loss on a short position, which is theoretically unlimited, if the price of the asset sold short increases from the short sale
price. The counterparty to a short position or other market factors may prevent the Fund from closing out a short position at a desirable
time or price and may reduce or eliminate any gain or result in a loss. In a rising market, the Fund’s short positions will cause
the Fund to underperform the overall market and its peers that do not engage in shorting. If the Fund holds both long and short positions,
and both positions decline simultaneously, the short positions will not provide any buffer (hedge) from declines in value of the Fund’s
long positions. Certain types of short positions involve leverage, which may exaggerate any losses, potentially more than the actual cost
of the investment, and will increase the volatility of the Fund’s returns.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities
denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value.
Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to
evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
3 Invesco
Income Fund
Depositary
Receipts Risk. Investing in depositary receipts involves
the same risks as direct investments in foreign securities. In addition, the underlying issuers of certain depositary receipts are under
no obligation to distribute shareholder communications or pass through any voting rights with respect to the deposited securities to the
holders of such receipts. The Fund may therefore receive less timely information or have less control than if it invested directly in
the foreign issuer.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. Liquid securities can become illiquid during periods of market stress. If a significant amount of the Fund’s
securities become illiquid, the Fund may not be able to timely pay redemption proceeds and may need to sell securities at significantly
reduced prices.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may
undergo
principal write-downs upon the occurrence of certain triggering events, and, as a result, are subject to an increased risk of loss. Convertible
securities may be rated below investment grade and therefore considered to have more speculative characteristics and greater susceptibility
to default or decline in market value than investment grade securities.
Municipal
Securities Risk. The
risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a
decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate
the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status
of municipal securities.
Active
Trading Risk.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. For periods prior to July 26, 2018, performance shown is that of the
Fund using its previous U.S. Government securities focused strategy. The performance table compares the Fund's performance to that of
a broad-based securities market benchmark.
The
Fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
2.24%
|
|
Best
Quarter |
June
30, 2020 |
13.63%
|
|
Worst
Quarter |
March
31, 2020 |
-24.89%
|
4 Invesco
Income Fund
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
4/28/1987
|
1.15
% |
-0.61
% |
0.10
% |
|
Return
After Taxes on Distributions |
|
-1.12
|
-2.28
|
-1.16
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
0.64
|
-1.14
|
-0.44
|
|
| ||||
|
Class
C |
8/4/1997
|
3.93
|
-0.45
|
-0.05
|
|
| ||||
|
Class
R |
6/3/2002
|
5.46
|
0.02
|
0.29
|
|
| ||||
|
Class
Y |
10/3/2008
|
5.83
|
0.51
|
0.79
|
|
| ||||
|
Investor
Class |
9/30/2003
|
5.80
|
0.36
|
0.60
|
|
| ||||
|
Class
R5 |
4/29/2005
|
6.07
|
0.63
|
0.91
|
|
| ||||
|
Class
R6 |
4/4/2017
|
6.15
|
0.65
|
0.79
1
|
|
| ||||
|
Bloomberg
U.S. Aggregate Bond Index (reflects
no
deduction
for fees, expenses or taxes) |
|
5.53
|
1.10
|
1.81
|
|
| ||||
1
Performance shown prior to the inception
date is that of the Fund's Class A shares at net asset value and includes the 12b-1 fees applicable to that class. Although invested in
the same portfolio of securities, Class R6 shares' returns of the Fund will be different from Class A shares' returns of the Fund as they
have different expenses.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors
who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement
accounts. After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment Adviser:
Invesco Advisers, Inc. (Invesco or the Adviser)
|
Portfolio
Managers |
Title
|
Length
of Service on the Fund |
|
Philip
Armstrong, CFA |
Portfolio
Manager |
2018
|
|
| ||
|
Kevin
Collins |
Portfolio
Manager |
2018
|
|
| ||
|
Clint
Dudley, CFA |
Portfolio
Manager |
2009
|
|
| ||
|
David
Lyle |
Portfolio
Manager |
2018
|
|
| ||
|
Brian
Norris, CFA |
Portfolio
Manager |
2018
|
|
| ||
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Investor
Class shares of the Fund are offered only to grandfathered investors.
The minimum investments for Class A, C, R, Y and Investor Class shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must
meet a minimum
initial investment of at least $1 million in each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement, such as
a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over another investment.
Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is current income, and secondarily, capital appreciation. The Fund’s investment objective may be changed by
the Board of Trustees (the Board) without shareholder approval.
The
Fund invests primarily in fixed-income securities and in derivatives and
other instruments that have economic characteristics similar to such securities. A significant portion of these securities consists of
privately-issued mortgage-backed and asset-backed securities such as CMBS, RMBS, and CLOs of any rating. The mortgage-backed securities
in which the Fund invests could also include mortgage pass-through certificates representing participation interests in pools of mortgage
loans originated by the U.S. Government or private lenders as well as those guaranteed by U.S. Government agencies such as GNMA, FNMA
or FHLMC.
The
Fund will concentrate (i.e. invest more than 25% of its total
assets) in
securities related to the real estate finance industry, including, without limitation, CMBS, RMBS, REITs, other REITs, loans and other
instruments that are secured by, or otherwise have exposure to, real estate. The Fund may, at times, invest substantially more than 25%
of its total assets in securities related to the real estate finance industry.
The
Fund invests in below-investment grade securities. Below-investment
grade securities are commonly referred to as junk bonds. A significant portion of the Fund’s investments consists of below-investment
grade securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund may buy or sell a security with payment and delivery taking place in the future. The payment
5 Invesco
Income Fund
obligation and
the interest rate are fixed at the time the Fund enters into the commitment. No income accrues on such securities until the date the Fund
actually takes delivery of the securities. The Fund will engage in TBA transactions, which are transactions in which a fund buys or sells
mortgage-backed securities on a forward commitment basis. A TBA transaction typically does not designate the actual security to be delivered
and only includes an approximate principal amount at the time the TBA is entered into. The Fund also expects to engage in short sales
of TBA mortgages, including short sales of TBA mortgages the Fund does not own. The Fund’s use of TBA transactions results in a
form of leverage, which could increase the volatility of the Fund’s share price.
The
Fund may invest in foreign securities, including securities of issuers located
in emerging markets countries (i.e., those that are generally in the early stages of their industrial cycles), in non-U.S. dollar denominated
securities and in depositary receipts.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap. The Fund can use swap contracts, including interest rate swaps, to seek to hedge or adjust
its exposure to interest rates and to manage duration. The Fund can further use credit default swaps or total return swaps to manage credit
exposure and to manage duration.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use currency options to manage currency exposure;
and options on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of the futures contract
tends to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures
contracts are settled by purchasing an offsetting contract, physically delivering the underlying asset on the settlement date or paying
a cash settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures contracts and bond
futures contracts, to increase or reduce exposure to changes in interest rates and to manage duration.
Duration
is a measure of volatility expressed in years and represents the anticipated
percent change in a fixed income investment’s price at a single point in time for a 1% change in yield. As duration increases,
volatility increases as applicable interest rates change.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. The Fund can use forward foreign currency contracts to
hedge against adverse
movements in the foreign currencies in which portfolio securities are denominated.
The
Fund may invest in illiquid or thinly traded investments. The Fund may
also invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended.
The
Fund may invest in convertible securities, municipal securities and common
and preferred stock of REITs.
The
portfolio managers seek risk-adjusted returns across the fixed income
spectrum in an effort to provide a high, stable monthly income while providing the opportunity for long term price appreciation. The portfolio
managers use a “top down” analysis of macroeconomic trends combined with a “bottom up” fundamental analysis
of market sub-sectors and individual issuers to seek to continuously create investable information advantages throughout a market cycle.
The portfolio managers will invest opportunistically across a wide range of credit and issuer types to seek to provide relative value
across fixed income.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial
6 Invesco
Income Fund
markets,
including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly acute in certain
sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the
mortgage- and asset-backed
securities and the Fund’s share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest
rate changes. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed
securities and will result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less
liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods
of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses.
Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued
mortgage-related securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to
those mortgage-related securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying
privately-issued mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other
underwriting characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number
of terms including interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include
subprime mortgages, which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments
on their mortgages. Liquidity risk is even greater for mortgage pools that include subprime mortgages. The risks of investing in
mortgage- and asset-backed securities will be greater for the Fund than other funds that do not concentrate in the real estate finance
industry.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk. The risks of investing in CLOs will be greater
for the Fund than other funds that do not concentrate in the real estate finance industry.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Real
Estate Finance Industry Concentration Risk.
Investments in real estate related instruments, including
CMBS, RMBS, CLOs and REITs, may be affected by economic, legal, cultural, environmental or technological factors that affect property
values, rents or occupancies of real estate related to the Fund’s holdings. Real estate companies, including REITs or similar structures,
tend to be small and mid-cap companies and their shares may be more volatile and less liquid than larger companies. The value of investments
in real estate related companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage
and financial covenants related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related
company defaults on certain types of debt obligations, the Fund may own real estate directly, which involves additional risks such as
environmental liabilities; difficulty in valuing and selling the real estate; and economic or regulatory changes. Because the Fund will
concentrate its investments in the real estate finance industry, the Fund will be subject to increased risks associated with this industry.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities
7 Invesco
Income Fund
(commonly referred
to as junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss. These securities are considered
to be speculative with respect to the issuer’s ability to pay interest and principal when due and are more susceptible to default
or decline in market value due to adverse economic, regulatory, political or company developments than higher rated or investment grade
securities. Prices of high yield debt securities tend to be very volatile. These securities are less liquid than investment grade debt
securities and may be difficult to sell at a desirable time or price, particularly in times of negative sentiment toward high yield securities.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or
less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to
counterparty risk because it relies on the buyer or seller, as the case may be, to consummate the transaction, and failure by the counterparty
to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous.
These transactions have a leveraging effect on the Fund because the Fund commits to purchase securities that it does not have to pay for
until a later date. These investments therefore increase the Fund’s overall investment exposure and, as a result, its volatility.
Typically, no income accrues on securities the Fund has committed to purchase prior to the time delivery of the securities is made.
TBA
Transactions Risk.
TBA transactions involve the risk that the securities received may be less favorable than what was anticipated by the Fund when entering
into the TBA transaction. TBA transactions also involve the risk that the counterparty will fail to deliver the securities, exposing the
Fund to further losses. Whether or not the Fund takes delivery of the securities at the termination date of a TBA transaction, the Fund
will nonetheless be exposed to changes in the value of the underlying investments during the term of the agreement. If the Fund sells
short TBA mortgages that it does not own and the mortgages increase in value, the Fund may be required to pay a higher price than anticipated
to purchase the deliverable mortgages to settle the short sale and thereby incur a loss. A short position in TBA mortgages poses more
risk than holding the same TBA mortgages long. It is possible that the market value of the mortgage securities the Fund holds in long
positions will decline at the same time that the market value of the mortgage securities the Fund has sold short increases, thereby magnifying
any losses. The more the Fund pays to purchase the mortgage securities sold short, the more it will lose on the transaction, which adversely
affects its share price. The loss on a long position is limited to what the Fund originally paid for the TBA mortgage, together with any
transaction costs. In short transactions, there is no limit on how much the price of a security can increase, thus the Fund’s exposure
is theoretically unlimited. The Fund normally closes a short sale of TBA mortgages that it does not own by purchasing mortgage securities
on the open market and delivering them to the broker. The Fund may not always be able to complete or “close out” the short
position by purchasing mortgage securities at a particular time or at an acceptable price. The Fund incurs a loss if the Fund is required
to buy the deliverable mortgage securities at a time when they have appreciated in value from the date of the short sale. The Fund will
incur increased transaction costs associated with selling TBA mortgages short. In addition, taking short positions results in a form of
leverage. As a result, changes in the value of a Fund’s investments will have a larger effect on its share price than if it did
not engage in these transactions.
Short
Position Risk.
The Fund will incur a loss on a short position if the price of the asset sold short increases from the short sale price. Because the Fund’s
potential loss on a short position arises from increases in the value of the asset sold short, the extent of such loss, like the price
of the asset sold short, is theoretically unlimited. Short sales are speculative transactions and involve greater reliance on the Adviser’s
ability to accurately anticipate the future value of an asset or markets in general. Any
gain on a short
position is decreased, and any loss is increased, by the amount of any payment, dividend, interest or other transaction costs that the
Fund may be required to pay with respect to the asset sold short. The counterparty to a short position or market factors, such as a sharp
increase in prices, may prevent the Fund from closing out a short position at a desirable time or price and may reduce or eliminate any
gain or result in a loss. In a rising market, the Fund’s short positions will cause the Fund to underperform the overall market
and its peers that do not engage in shorting. If the Fund holds both long and short positions, both positions may decline simultaneously,
in which case the short positions will not provide any buffer (hedge) from declines in value of the Fund’s long positions. Certain
types of short positions involve leverage, which may exaggerate any losses, potentially more than the actual cost of the investment, and
will increase the volatility of the Fund’s returns.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Changes in political and economic factors in one country or region could adversely affect conditions in another country or region. Investments
in foreign securities may also expose the Fund to time-zone arbitrage risk. At times, the Fund may emphasize investments in a particular
country or region and may be subject to greater risks from adverse events that occur in that country or region. Unless the Fund has hedged
its foreign currency exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may
cause the value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign
currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies,
if used, are not always successful. For instance, currency forward contracts, if used by the Fund, could reduce performance if there are
unanticipated changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
8 Invesco
Income Fund
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection, investigation and enforcement
capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted by
audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries
may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Depositary
Receipts Risk.
Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the
underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation
to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to
the deposited securities. The Fund may therefore receive less timely information or have less control than if it invested directly in
the foreign issuer.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about
the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt securities, which are not registered for sale pursuant to an exemption from
registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be
9 Invesco
Income Fund
most
in need of liquidating its derivative positions. To the extent that the Fund is unable to exit a derivative position because of market
illiquidity, the Fund may not be able to prevent further losses of value in its derivatives holdings and the liquidity of the Fund and
its ability to meet redemption requests may be impaired to the extent that a substantial portion of the Fund’s otherwise liquid
assets must be used as margin. Another consequence of illiquidity is that the Fund may be required to hold a derivative instrument to
maturity and take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a security denominated in a foreign currency or protect against possible losses
from changes in the relative value of the U.S. dollar against a foreign currency. They are subject to the risk that anticipated currency
movements will not be accurately predicted or do not correspond accurately to changes in the value of the fund's holdings, which could
result in losses and additional transaction costs. The use of forward contracts could reduce performance if there are unanticipated changes
in currency prices. A contract to sell a foreign currency would limit any potential gain that might be realized if the value of the currency
increases. A forward foreign currency contract may also result in losses in the event of a default or bankruptcy of the counterparty.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted for clearing to a central clearing house counterparty, and the Fund faces
the central clearing house counterparty by means of an account with a futures commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which
could
make the investment strategy more costly to implement or require the Fund to change its investment strategy. Derivatives strategies
may not always be successful. For example, to the extent that the Fund uses derivatives for hedging or to gain or limit exposure to a
particular market or market segment, there may be imperfect correlation between the value of the derivative instrument and the value of
the instrument being hedged or the relevant market or market segment, in which case the Fund may not realize the intended benefits. There
is also the risk that during adverse market conditions, an instrument which would usually operate as a hedge provides no hedging benefits
at all. The Fund’s use of derivatives may be limited by the requirements for taxation of the Fund as a regulated investment company.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. An investment may be illiquid due to a lack of trading volume in the investment or if the investment is privately
placed and not traded in any public market or is otherwise restricted from trading. Liquid securities can become illiquid during periods
of market stress. If a significant amount of the Fund’s securities become illiquid, the Fund may not be able to timely pay redemption
proceeds and may need to sell securities at significantly reduced prices.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more senior securities. For this reason, the value of preferred
securities will usually react more strongly than bonds and other debt securities to actual or perceived changes in the company’s
financial condition or prospects. Preferred securities may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be converted into or exchanged for
a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible
debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed.
Some convertible debt securities may be considered “equity equivalents” because of the feature that makes them convertible
into common stock. Since a convertible security derives a portion of its value from the common stock into which it may be converted, a
convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock. In addition,
certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain
triggering events. These convertible securities are subject to an increased risk of loss and are generally subordinate in rank to other
debt obligations of the issuer. Convertible securities may be rated below investment grade and therefore considered to have more speculative
characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Municipal
Securities Risk.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional
10 Invesco
Income Fund
economic conditions
may affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the
security. Municipal obligations may be more susceptible to downgrades or defaults during recessions or similar periods of economic stress.
Municipal securities structured as revenue bonds are generally not backed by the taxing power of the issuing municipality but rather the
revenue from the particular project or entity for which the bonds were issued. If the Internal Revenue Service determines that an issuer
of a municipal security has not complied with applicable tax requirements, interest from the security could be treated as taxable, which
could result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments
that reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal
or state tax status of municipal securities.
Active
Trading Risk.
Active trading of portfolio securities may result in high brokerage costs, which may lower the Fund’s actual return. Active trading
also may increase the proportion of the Fund’s gains that are short term, which are taxed at a higher rate than long term
gains.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available to the Adviser in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve
its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is
permitted to invest
in these instruments as further described in the Fund's SAI. However, the Fund is not intended as a vehicle for trading in the commodity
futures, commodity options or swaps markets. The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions,
or the Fund, its investment strategies or this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29 2024, the Adviser received compensation of 0.45% of the Fund's average daily net assets, after fee waiver
and/or expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Philip
Armstrong, CFA, Portfolio Manager, who has been responsible for the Fund since 2018, and has been associated with Invesco and/or its affiliates
since 2015.
■
Kevin
Collins, Portfolio Manager, who has been responsible for the Fund since 2018 and has been associated with Invesco and/or its affiliates
since 2007.
■
Clint
Dudley, CFA, Portfolio Manager, who has been responsible for the Fund since 2009 and has been associated with Invesco and/or its affiliates
since 1998.
■
David
Lyle, Portfolio Manager, who has been responsible for the Fund since 2018 and has been associated with Invesco and/or its affiliates since
2006.
■
Brian
Norris, CFA, Portfolio Manager, who has been responsible for the Fund since 2018 and has been associated with Invesco and/or its affiliates
since 2001.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers’
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 4.25% initial sales charge as listed under the heading “Category II Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a
commission at the time of purchase. For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred
Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
11 Invesco
Income Fund
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
12 Invesco
Income Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(both
realized
and
unrealized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | ||||||||||||||
|
Year
ended 02/29/24 |
$7.00
|
$0.32
|
$(0.08
) |
$0.24
|
$(0.39
) |
$—
|
$(0.39
) |
$6.85
|
3.62
% |
$240,670
|
0.99
% |
1.00
% |
4.68
% |
268
% |
|
Year
ended 02/28/23 |
7.71
|
0.28
|
(0.73
) |
(0.45
) |
(0.26
) |
—
|
(0.26
) |
7.00
|
(5.88
) |
257,447
|
0.96
|
0.97
|
3.95
|
199
|
|
Year
ended 02/28/22 |
7.94
|
0.20
|
(0.20
) |
0.00
|
(0.23
) |
—
|
(0.23
) |
7.71
|
(0.06
) |
303,030
|
0.91
|
0.91
|
2.56
|
220
|
|
Year
ended 02/28/21 |
8.68
|
0.23
|
(0.66
) |
(0.43
) |
(0.30
) |
(0.01
) |
(0.31
) |
7.94
|
(4.62
) |
336,319
|
0.97
|
0.97
|
3.16
|
276
|
|
Year
ended 02/29/20 |
8.51
|
0.35
|
0.22
|
0.57
|
(0.40
) |
—
|
(0.40
) |
8.68
|
6.75
|
405,061
|
1.00
|
1.00
|
4.08
|
97
|
|
| ||||||||||||||
|
Class
C | ||||||||||||||
|
Year
ended 02/29/24 |
7.00
|
0.27
|
(0.07
) |
0.20
|
(0.34
) |
—
|
(0.34
) |
6.86
|
2.99
|
4,340
|
1.74
|
1.75
|
3.93
|
268
|
|
Year
ended 02/28/23 |
7.71
|
0.23
|
(0.74
) |
(0.51
) |
(0.20
) |
—
|
(0.20
) |
7.00
|
(6.59
) |
4,957
|
1.71
|
1.72
|
3.20
|
199
|
|
Year
ended 02/28/22 |
7.94
|
0.14
|
(0.20
) |
(0.06
) |
(0.17
) |
—
|
(0.17
) |
7.71
|
(0.81
) |
6,586
|
1.66
|
1.66
|
1.81
|
220
|
|
Year
ended 02/28/21 |
8.68
|
0.18
|
(0.67
) |
(0.49
) |
(0.25
) |
(0.00
) |
(0.25
) |
7.94
|
(5.35
) |
5,489
|
1.72
|
1.72
|
2.41
|
276
|
|
Year
ended 02/29/20 |
8.50
|
0.29
|
0.22
|
0.51
|
(0.33
) |
—
|
(0.33
) |
8.68
|
6.09
|
9,556
|
1.75
|
1.75
|
3.33
|
97
|
|
| ||||||||||||||
|
Class
R | ||||||||||||||
|
Year
ended 02/29/24 |
7.00
|
0.30
|
(0.07
) |
0.23
|
(0.37
) |
—
|
(0.37
) |
6.86
|
3.52
|
4,889
|
1.24
|
1.25
|
4.43
|
268
|
|
Year
ended 02/28/23 |
7.72
|
0.27
|
(0.75
) |
(0.48
) |
(0.24
) |
—
|
(0.24
) |
7.00
|
(6.23
) |
3,945
|
1.21
|
1.22
|
3.70
|
199
|
|
Year
ended 02/28/22 |
7.95
|
0.18
|
(0.20
) |
(0.02
) |
(0.21
) |
—
|
(0.21
) |
7.72
|
(0.27
) |
4,043
|
1.16
|
1.16
|
2.31
|
220
|
|
Year
ended 02/28/21 |
8.69
|
0.22
|
(0.67
) |
(0.45
) |
(0.28
) |
(0.01
) |
(0.29
) |
7.95
|
(4.85
) |
3,832
|
1.22
|
1.22
|
2.91
|
276
|
|
Year
ended 02/29/20 |
8.52
|
0.33
|
0.21
|
0.54
|
(0.37
) |
—
|
(0.37
) |
8.69
|
6.48
|
4,443
|
1.25
|
1.25
|
3.83
|
97
|
|
| ||||||||||||||
|
Class
Y | ||||||||||||||
|
Year
ended 02/29/24 |
7.01
|
0.34
|
(0.08
) |
0.26
|
(0.41
) |
—
|
(0.41
) |
6.86
|
3.88
|
7,189
|
0.74
|
0.75
|
4.93
|
268
|
|
Year
ended 02/28/23 |
7.72
|
0.30
|
(0.73
) |
(0.43
) |
(0.28
) |
—
|
(0.28
) |
7.01
|
(5.63
) |
5,059
|
0.71
|
0.72
|
4.20
|
199
|
|
Year
ended 02/28/22 |
7.95
|
0.23
|
(0.21
) |
0.02
|
(0.25
) |
—
|
(0.25
) |
7.72
|
0.19
|
7,659
|
0.66
|
0.66
|
2.81
|
220
|
|
Year
ended 02/28/21 |
8.69
|
0.26
|
(0.67
) |
(0.41
) |
(0.32
) |
(0.01
) |
(0.33
) |
7.95
|
(4.37
) |
49,578
|
0.72
|
0.72
|
3.41
|
276
|
|
Year
ended 02/29/20 |
8.52
|
0.38
|
0.21
|
0.59
|
(0.42
) |
—
|
(0.42
) |
8.69
|
7.02
|
10,540
|
0.75
|
0.75
|
4.33
|
97
|
|
| ||||||||||||||
|
Investor
Class | ||||||||||||||
|
Year
ended 02/29/24 |
7.01
|
0.33
|
(0.08
) |
0.25
|
(0.40
) |
—
|
(0.40
) |
6.86
|
3.70
(d)
|
13,792
|
0.87
(d)
|
0.88
(d)
|
4.80
(d)
|
268
|
|
Year
ended 02/28/23 |
7.72
|
0.29
|
(0.74
) |
(0.45
) |
(0.26
) |
—
|
(0.26
) |
7.01
|
(5.78
)(d)
|
15,088
|
0.91
(d)
|
0.92
(d)
|
4.00
(d)
|
199
|
|
Year
ended 02/28/22 |
7.95
|
0.21
|
(0.21
) |
0.00
|
(0.23
) |
—
|
(0.23
) |
7.72
|
0.01
(d)
|
17,588
|
0.83
(d)
|
0.83
(d)
|
2.64
(d)
|
220
|
|
Year
ended 02/28/21 |
8.69
|
0.24
|
(0.67
) |
(0.43
) |
(0.30
) |
(0.01
) |
(0.31
) |
7.95
|
(4.55
)(d)
|
19,552
|
0.89
(d)
|
0.89
(d)
|
3.24
(d)
|
276
|
|
Year
ended 02/29/20 |
8.52
|
0.36
|
0.21
|
0.57
|
(0.40
) |
—
|
(0.40
) |
8.69
|
6.81
(d)
|
24,787
|
0.93
(d)
|
0.93
(d)
|
4.15
(d)
|
97
|
|
| ||||||||||||||
|
Class
R5 | ||||||||||||||
|
Year
ended 02/29/24 |
7.00
|
0.34
|
(0.07
) |
0.27
|
(0.41
) |
—
|
(0.41
) |
6.86
|
4.12
|
373
|
0.66
|
0.66
|
5.01
|
268
|
|
Year
ended 02/28/23 |
7.72
|
0.31
|
(0.75
) |
(0.44
) |
(0.28
) |
—
|
(0.28
) |
7.00
|
(5.67
) |
351
|
0.61
|
0.62
|
4.30
|
199
|
|
Year
ended 02/28/22 |
7.94
|
0.23
|
(0.19
) |
0.04
|
(0.26
) |
—
|
(0.26
) |
7.72
|
0.41
|
405
|
0.54
|
0.54
|
2.93
|
220
|
|
Year
ended 02/28/21 |
8.68
|
0.26
|
(0.67
) |
(0.41
) |
(0.32
) |
(0.01
) |
(0.33
) |
7.94
|
(4.26
) |
388
|
0.57
|
0.57
|
3.56
|
276
|
|
Year
ended 02/29/20 |
8.51
|
0.38
|
0.22
|
0.60
|
(0.43
) |
—
|
(0.43
) |
8.68
|
7.11
|
508
|
0.64
|
0.64
|
4.44
|
97
|
|
| ||||||||||||||
|
Class
R6 | ||||||||||||||
|
Year
ended 02/29/24 |
6.99
|
0.35
|
(0.08
) |
0.27
|
(0.42
) |
—
|
(0.42
) |
6.84
|
4.04
|
82,517
|
0.59
|
0.59
|
5.08
|
268
|
|
Year
ended 02/28/23 |
7.70
|
0.31
|
(0.73
) |
(0.42
) |
(0.29
) |
—
|
(0.29
) |
6.99
|
(5.49
) |
100,183
|
0.54
|
0.55
|
4.37
|
199
|
|
Year
ended 02/28/22 |
7.93
|
0.24
|
(0.21
) |
0.03
|
(0.26
) |
—
|
(0.26
) |
7.70
|
0.36
|
162,015
|
0.49
|
0.49
|
2.98
|
220
|
|
Year
ended 02/28/21 |
8.67
|
0.27
|
(0.67
) |
(0.40
) |
(0.33
) |
(0.01
) |
(0.34
) |
7.93
|
(4.23
) |
227,247
|
0.52
|
0.52
|
3.61
|
276
|
|
Year
ended 02/29/20 |
8.51
|
0.39
|
0.20
|
0.59
|
(0.43
) |
—
|
(0.43
) |
8.67
|
7.00
|
36
|
0.63
|
0.63
|
4.45
|
97
|
|
| ||||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns
based
upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges
and is not annualized for periods less than one
year,
if applicable. |
|
(c)
|
Portfolio
turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
|
(d)
|
The
total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees
of 0.13%, 0.20%, 0.17%,0.17% and 0.19% for the
years
ended February 29, 2024, February 28, 2023, February 28, 2022, February 28, 2021 and February 29, 2020, respectively. |
13 Invesco
Income Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
(0.42)%
|
3.56%
|
7.70%
|
12.01%
|
16.49%
|
21.15%
|
26.00%
|
31.04%
|
36.28%
|
41.73%
|
|
End
of Year Balance |
$9,958.00
|
$10,356.32
|
$10,770.57
|
$11,201.39
|
$11,649.45
|
$12,115.43
|
$12,600.05
|
$13,104.05
|
$13,628.21
|
$14,173.34
|
|
Estimated
Annual Expenses |
$522.67
|
$101.57
|
$105.63
|
$109.86
|
$114.25
|
$118.82
|
$123.58
|
$128.52
|
$133.66
|
$139.01
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.00%
|
8.16%
|
12.49%
|
16.99%
|
21.67%
|
26.54%
|
31.60%
|
36.86%
|
42.33%
|
48.02%
|
|
End
of Year Balance |
$10,400.00
|
$10,816.00
|
$11,248.64
|
$11,698.59
|
$12,166.53
|
$12,653.19
|
$13,159.32
|
$13,685.69
|
$14,233.12
|
$14,802.44
|
|
Estimated
Annual Expenses |
$102.00
|
$106.08
|
$110.32
|
$114.74
|
$119.33
|
$124.10
|
$129.06
|
$134.23
|
$139.59
|
$145.18
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
1.75%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.25%
|
6.61%
|
10.07%
|
13.65%
|
17.34%
|
21.15%
|
25.09%
|
29.16%
|
34.33%
|
39.70%
|
|
End
of Year Balance |
$10,325.00
|
$10,660.56
|
$11,007.03
|
$11,364.76
|
$11,734.11
|
$12,115.47
|
$12,509.22
|
$12,915.77
|
$13,432.40
|
$13,969.70
|
|
Estimated
Annual Expenses |
$177.84
|
$183.62
|
$189.59
|
$195.75
|
$202.12
|
$208.68
|
$215.47
|
$222.47
|
$131.74
|
$137.01
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.75%
|
7.64%
|
11.68%
|
15.87%
|
20.22%
|
24.73%
|
29.41%
|
34.26%
|
39.29%
|
44.51%
|
|
End
of Year Balance |
$10,375.00
|
$10,764.06
|
$11,167.71
|
$11,586.50
|
$12,020.99
|
$12,471.78
|
$12,939.47
|
$13,424.70
|
$13,928.13
|
$14,450.43
|
|
Estimated
Annual Expenses |
$127.34
|
$132.12
|
$137.07
|
$142.21
|
$147.55
|
$153.08
|
$158.82
|
$164.78
|
$170.96
|
$177.37
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.25%
|
8.68%
|
13.30%
|
18.12%
|
23.14%
|
28.37%
|
33.83%
|
39.52%
|
45.45%
|
51.63%
|
|
End
of Year Balance |
$10,425.00
|
$10,868.06
|
$11,329.95
|
$11,811.47
|
$12,313.46
|
$12,836.78
|
$13,382.34
|
$13,951.09
|
$14,544.01
|
$15,162.13
|
|
Estimated
Annual Expenses |
$76.59
|
$79.85
|
$83.24
|
$86.78
|
$90.47
|
$94.31
|
$98.32
|
$102.50
|
$106.86
|
$111.40
|
|
| ||||||||||
|
Investor
Class |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.12%
|
8.41%
|
12.88%
|
17.53%
|
22.37%
|
27.41%
|
32.66%
|
38.13%
|
43.82%
|
49.75%
|
|
End
of Year Balance |
$10,412.00
|
$10,840.97
|
$11,287.62
|
$11,752.67
|
$12,236.88
|
$12,741.04
|
$13,265.97
|
$13,812.53
|
$14,381.61
|
$14,974.13
|
|
Estimated
Annual Expenses |
$89.81
|
$93.51
|
$97.37
|
$101.38
|
$105.55
|
$109.90
|
$114.43
|
$119.15
|
$124.05
|
$129.17
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
0.67%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.33%
|
8.85%
|
13.56%
|
18.48%
|
23.61%
|
28.96%
|
34.54%
|
40.37%
|
46.45%
|
52.79%
|
|
End
of Year Balance |
$10,433.00
|
$10,884.75
|
$11,356.06
|
$11,847.78
|
$12,360.79
|
$12,896.01
|
$13,454.41
|
$14,036.99
|
$14,644.79
|
$15,278.91
|
|
Estimated
Annual Expenses |
$68.45
|
$71.41
|
$74.51
|
$77.73
|
$81.10
|
$84.61
|
$88.27
|
$92.10
|
$96.08
|
$100.24
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.40%
|
8.99%
|
13.79%
|
18.80%
|
24.03%
|
29.49%
|
35.19%
|
41.14%
|
47.35%
|
53.83%
|
|
End
of Year Balance |
$10,440.00
|
$10,899.36
|
$11,378.93
|
$11,879.60
|
$12,402.30
|
$12,948.00
|
$13,517.71
|
$14,112.49
|
$14,733.44
|
$15,381.71
|
|
Estimated
Annual Expenses |
$61.32
|
$64.02
|
$66.83
|
$69.78
|
$72.85
|
$76.05
|
$79.40
|
$82.89
|
$86.54
|
$90.35
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
14 Invesco
Income Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Income Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
INC-PRO-1
|
Prospectus
June 28, 2024
Class:
A (OFIAX), C (OFICX), R (OFINX), Y (OFIYX), R5 (IOTEX), R6 (OFIIX)
Invesco
Intermediate Bond Factor Fund
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco
Intermediate Bond Factor Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is to seek total return.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
|
Class:
|
A
|
C
|
R
|
Y
|
R5
|
R6
|
|
Management
Fees |
0.25
% |
0.25
% |
0.25
% |
0.25
% |
0.25
% |
0.25
% |
|
| ||||||
|
Distribution
and/or Service (12b-1) Fees |
0.24
|
1.00
|
0.50
|
None
|
None
|
None
|
|
| ||||||
|
Other
Expenses |
0.35
|
0.35
|
0.35
|
0.35
|
0.19
|
0.19
|
|
| ||||||
|
Total
Annual Fund Operating Expenses |
0.84
|
1.60
|
1.10
|
0.60
|
0.44
|
0.44
|
|
| ||||||
|
Fee
Waiver and/or Expense Reimbursement2
|
0.31
|
0.32
|
0.32
|
0.32
|
0.16
|
0.16
|
|
| ||||||
|
Total
Annual Fund Operating Expenses After Fee
Waiver
and/or Expense Reimbursement |
0.53
|
1.28
|
0.78
|
0.28
|
0.28
|
0.28
|
|
| ||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
|
2 |
Invesco Advisers,
Inc. (Invesco or the Adviser) has contractually agreed 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 in the SAI) of Class
A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.52%, 1.27%, 0.77%, 0.27%, 0.27% and 0.27%, respectively, of the Fund's
average daily net assets (the “expense limits”). Unless Invesco continues the fee waiver agreement, it will terminate on
June
30, 2025. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without
approval of the Board of Trustees.
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain equal to the Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement in the first year and the Total Annual Fund Operating Expenses thereafter.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 276%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
Under normal market
conditions, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in debt securities, and
in derivatives and other instruments that have economic characteristics similar to such securities.
The
kinds of debt securities in which the Fund can invest include investment
grade U.S. corporate and government debt obligations (including securities issued or guaranteed by the U.S. Government or its agencies
or federally-chartered entities referred to as “instrumentalities” ), as well as mortgage-backed, commercial mortgage-backed
and asset-backed securities. The Fund’s debt investments may include certain restricted securities, including securities
that are only eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as amended.
Under
normal market conditions, the Fund will only purchase investment grade
debt securities. “Investment-grade” debt securities are securities rated at or above “BBB-” or “Baa3”
by at least one of S&P Global Ratings (S&P) or Moody’s Investors Service (Moody’s), respectively, or that have comparable
ratings from other nationally recognized statistical rating organizations (NRSROs). If two or more nationally recognized statistical rating
organizations have assigned different ratings to a security, the investment adviser uses the highest rating assigned. The Fund may also
invest in unrated securities, in which case Invesco Advisers, Inc. (Invesco or the Adviser) may internally assign ratings to certain of
those securities, after assessing their credit quality, in investment grade categories similar to those of NRSROs. There can be no assurance,
nor is it intended, that the Adviser’s credit analysis is consistent or comparable with the credit analysis process used by an
NRSRO.
Although
the Fund will only purchase investment grade debt securities (or
unrated securities that the Adviser has assessed as investment grade), it may continue to hold a security whose credit has been downgraded
or, in the case of an unrated security, after the Adviser has changed its
1 Invesco
Intermediate Bond Factor Fund
assessment of the
security’s quality. As a result, credit rating downgrades or other market fluctuations may cause the Fund’s holdings
of below-investment grade, fixed income securities (also known as “junk” bonds) to become significant for an extended period
of time.
The
Fund seeks to maintain a dollar-weighted average effective portfolio maturity
of four to ten years; however, it may purchase securities that have short, intermediate or long maturities.
The
Fund may purchase securities of issuers of any market capitalization.
The
Fund is managed by Invesco’s Fixed Income Factor Team (FIF). In selecting
securities for the portfolio, the Fund’s portfolio managers and FIF analysts utilize a factor-based strategy that involves systematically
targeting securities exhibiting quantifiable issuer characteristics (or “factors”) that FIF believes will have higher returns
than other fixed income securities with comparable characteristics over market cycles. The portfolio managers will consider selling
securities that no longer exhibit these factors. In practice, this means the Fund may have higher allocations to: value bonds (bonds
that have high spreads relative to other securities of similar credit quality and/or sector); low volatility bonds (bonds that have lower
levels of price volatility); and high carry bonds (bonds with higher absolute yield or spread). The portfolio managers expect to
include additional factors or modify the factors used to build the Fund’s portfolio as they deem appropriate. The portfolio managers
will also seek to minimize some of the residual risks associated with the higher allocations to the types of bonds mentioned above (such
as duration and sector concentration), including through the use of derivatives, as described below.
The
Fund may invest in foreign debt securities, including securities issued
by foreign governments or companies in developing and emerging markets, i.e., those that are generally in the early stages of their industrial
cycles, but may only invest up to 25% of its net assets in securities denominated in non-U.S. dollar currencies of which no more than
10% may remain unhedged. The portfolio managers may use derivatives to seek to hedge any foreign currency exposure.
The
Fund may invest in U.S. agency mortgage pass-through securities and
may seek to obtain such exposure primarily through the use of standardized agreements for forward or future delivery in which the actual
mortgage pools to be delivered are not specified until shortly prior to settlement (to be announced (TBA) transactions).
The
Fund may also use certain types of derivative investments for investment
purposes or for hedging, including: options, futures, forward contracts, swaps, “structured” notes and other types of derivatives.
The
Fund can use swap contracts, including interest rate swaps, to hedge
or adjust its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to create long or short
exposure to corporate or sovereign debt securities. The Fund can further use swap contracts, including credit default index swaps, to
hedge credit risk or take a position on a basket of credit entities; total return swaps, to gain exposure to a reference asset; and
volatility swaps to adjust the volatility profile of the Fund.
The
Fund can use options, including currency options, to seek alpha (return
on investments in excess of the benchmark index) or to mitigate risk and to hedge against adverse movements in the foreign currencies
in which portfolio securities are denominated. The Fund can also use credit default swap options to gain the right to enter into a credit
default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage interest rate risk; and options
on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures and Treasury
futures, to increase or reduce its exposure to interest rate changes. The Fund can also use currency futures to increase or decrease its
exposure to foreign currencies. The Fund can engage in foreign currency transactions either on a spot basis (i.e., for prompt delivery
and settlement at the rate prevailing in the currency exchange market at the time) or
through forward
foreign currency contracts to gain or mitigate the risk of foreign currency exposure.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund buys or sells a security with payment and delivery taking place in the future. The payment obligation
and the interest rate are fixed at the time the Fund enters into the commitment. No income accrues on such securities until the date the
Fund actually takes delivery of the securities.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events
2 Invesco
Intermediate Bond Factor Fund
within
the U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Factor-Based
Investing Risk.
Although the Adviser uses a proprietary factor-based investment strategy designed to target securities exhibiting certain factor characteristics,
there is no guarantee the factor-based investment strategy will produce the desired outcomes. To the extent the factor-based investment
strategy or the information and data included therein are incorrect or incomplete, the decisions made by the Adviser in reliance thereon
will expose the Fund to potential risks and could lead to the Fund incurring losses on its investments. In addition, there may be periods
when a particular factor is out of favor and therefore, during such periods, the Fund may incur losses.
■
High
Carry Factor. Securities exhibiting a high carry factor are
subject to the risk that changes in interest rates, exchange rates or their term will affect their value.
■
Low
Volatility Factor. Low volatility securities are seen as
having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility securities may not produce investment
exposure that has lower variability to changes in such securities’ price levels. Low volatility securities may also underperform
the broader market during periods of rapidly rising security prices.
■
Value
Factor. Value securities are subject to the risk that valuations
never improve or that the returns on value securities are less than returns on other styles of investing or the overall stock market.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities
denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value.
Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed
markets.
In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies
in more developed markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be
highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory,
disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result,
information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s
ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change
quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. Without the approval of debt holders, some governmental
debtors have in the past been able to reschedule or restructure their debt payments or declare moratoria on payments.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
TBA
Transactions Risk.
TBA transactions involve the risk of loss if the securities received are less favorable than what was anticipated by the Fund when entering
into the TBA transaction, or if the counterparty fails to deliver the securities.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting
3 Invesco
Intermediate Bond Factor Fund
requirements
as those with government or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related
securities may have less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances
in interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Active
Trading Risk.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions subject the Fund to market risk because the value or yield of a security at delivery may
be more or less than the purchase price or yield generally available when delivery occurs, and counterparty risk because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction. These transactions also have a leveraging effect on the Fund
because the Fund commits to purchase securities that it does not have to pay for until a later date, which increases the Fund’s
overall investment exposure and, as a result, its volatility.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The Fund has adopted the
performance of the Oppenheimer Intermediate Income Fund (the predecessor fund) as the result of a reorganization of the predecessor fund
into the Fund, which was consummated after the close of business on May 24, 2019 (the “Reorganization”). Prior to the Reorganization,
the Fund had not yet commenced operations. The bar chart shows changes in the performance of the Fund and the predecessor fund from
year to year as of December 31. For periods prior to February 28, 2020, performance shown is that of the Fund using its previous investment
strategy. Therefore, the past performance shown for periods prior to February 28, 2020 may have differed had the Fund’s current
investment strategy been in effect. The performance table compares the Fund’s and the predecessor fund’s performance to
that of a broad measure of market performance.
The
Fund’s (and the predecessor fund’s) past performance (before and after
taxes) is not necessarily an indication of how the Fund will perform in the future. The returns shown for periods ending
on or prior to May 24, 2019 are those of the Class A, Class C, Class R, Class Y and Class I shares of the predecessor
fund. Class A, Class C, Class R, Class Y and Class I shares of the predecessor fund were reorganized into Class A,
Class C, Class R, Class Y and Class R6 shares, respectively, of the Fund after the close of business on May 24, 2019. Class A,
Class C, Class R, Class Y and Class R6 shares’ returns of the Fund will be different from the returns of the predecessor
fund as they have different expenses. Performance for Class A shares has been restated to reflect the Fund’s applicable sales
charge.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
-0.49%
|
|
Best
Quarter |
December
31, 2023 |
6.79%
|
|
Worst
Quarter |
March
31, 2022 |
-6.33%
|
4 Invesco
Intermediate Bond Factor Fund
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
8/2/2010
|
1.79
% |
0.81
% |
1.57
% |
|
Return
After Taxes on Distributions |
|
0.70
|
-0.44
|
0.30
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
1.03
|
0.17
|
0.68
|
|
| ||||
|
Class
C |
8/2/2010
|
4.48
|
0.87
|
1.38
|
|
| ||||
|
Class
R |
8/2/2010
|
5.89
|
1.36
|
1.73
|
|
| ||||
|
Class
Y |
8/2/2010
|
6.54
|
1.95
|
2.29
|
|
| ||||
|
Class
R5 |
5/24/2019
|
6.54
|
1.89
1
|
2.11
1
|
|
| ||||
|
Class
R6 |
11/28/2012
|
6.54
|
1.95
|
2.37
|
|
| ||||
|
Bloomberg
U.S. Aggregate Bond Index (reflects
no
deduction
for fees, expenses or taxes) |
|
5.53
|
1.10
|
1.81
|
|
| ||||
1
Performance shown prior to the
inception date is that of the predecessor fund's Class A shares at net asset value and includes the 12b-1 fees applicable to that class.
Although invested in the same portfolio of securities, Class R5 shares' returns of the Fund will be different from Class A shares' returns
of the predecessor fund as they have different expenses.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors
who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement
accounts. After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
|
Portfolio
Managers |
Title
|
Length
of Service on the Fund |
|
Noelle
Corum, CFA |
Portfolio
Manager |
2020
|
|
| ||
|
Jacob
Habibi, CFA |
Portfolio
Manager |
2023
|
|
| ||
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
The
minimum investments for Class A, C, R and Y shares for fund accounts
are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million,
unless such investment
is made by (i) an investment company, as defined under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family
of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established with a 529 college
savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through
a tax-advantaged arrangement, such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from
a 401(k) plan or individual retirement account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over another investment.
Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is to seek total return. The Fund’s investment objective may be changed by the Board of Trustees (the Board)
without shareholder approval.
Under
normal market conditions, the Fund will invest at least 80% of its net
assets (plus any borrowings for investment purposes) in debt securities, and in derivatives and other instruments that have economic characteristics
similar to such securities.
The
kinds of debt securities in which the Fund can invest include investment
grade U.S. corporate and government debt obligations (including securities issued or guaranteed by the U.S. Government or its agencies
or federally-chartered entities referred to as “instrumentalities” ), as well as mortgage-backed, commercial mortgage-backed
and asset-backed securities. The Fund’s debt investments may include certain restricted securities, including securities that are
only eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as amended.
The
Fund may invest in securities issued or guaranteed by the U.S. government
or its agencies and instrumentalities. Some of those securities are directly issued by the U.S. Treasury and are backed by the full faith
and credit of the U.S. government. “Full faith and credit” means that the taxing power of the U.S. government is pledged
to the payment of interest and repayment of principal on a security. Some of the securities that are issued directly by the U.S. Treasury
are: Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years when
issued), Treasury bonds (having maturities of more than ten years when issued) and Treasury Inflation-Protection Securities (TIPS).
Some
securities issued by U.S. government agencies, such as Government
National Mortgage Association pass-through mortgage obligations (Ginnie Maes), are also backed by the full faith and credit of the
5 Invesco
Intermediate Bond Factor Fund
U.S. government.
Others are supported only by the credit of the agency that issued them (for example, obligations issued by the Federal Home Loan Banks,
“Fannie Mae” bonds issued by the Federal National Mortgage Association and “Freddie Mac” obligations issued
by the Federal Home Loan Mortgage Corporation).
The
Fund can buy interests in pools of residential or commercial mortgages
in the form of “pass-through” mortgage securities. They may be issued or guaranteed by the U.S. government, or its agencies
and instrumentalities, or by private issuers, such as corporations, banks, savings and loans, mortgage bankers and other non-governmental
issuers. Mortgage-related securities may be issued in different series, each having different interest rates and maturities. Mortgage-related
securities that are U.S. government securities have collateral to secure payment of interest and principal. The collateral is either in
the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a
U.S. government agency.
Mortgage-related
private issuer securities include multi-class debt or pass-through
certificates secured by mortgage loans, which may be issued by private issuers. Private-issuer mortgage-backed securities may include
loans on residential or commercial properties. Mortgage-related securities, including collateralized mortgage obligations (CMOs), issued
by private issuers are not U.S. government securities, making them subject to greater credit risks than U.S. government securities. Asset-backed
securities are fractional interests in pools of loans, receivables or other assets. They are issued by trusts or other special purpose
vehicles and are collateralized by the loans, receivables or other assets that make up the pool. The trust or other issuer passes the
income from the underlying asset pool to the investor. Neither the Fund nor the adviser selects the loans, receivables or other assets
that are included in the pools or the collateral backing those pools.
Under
normal market conditions, the Fund will only purchase investment grade
debt securities. “Investment-grade” debt securities are securities rated at or above “BBB-” or “Baa3”
by at least one of S&P or Moody’s, respectively, or that have comparable ratings from other NRSROs. If two or more nationally
recognized statistical rating organizations have assigned different ratings to a security, the investment adviser uses the highest rating
assigned. The Fund may also invest in unrated securities, in which case the Adviser may internally assign ratings to certain of those
securities, after assessing their credit quality, in investment grade categories similar to those of NRSROs. There can be no assurance,
nor is it intended, that the Adviser’s credit analysis is consistent or comparable with the credit analysis process used by an
NRSRO.
Although
the Fund will only purchase investment grade debt securities (or
unrated securities that the Adviser has assessed as investment grade), it may continue to hold a security whose credit has been downgraded
or, in the case of an unrated security, after the Adviser has changed its assessment of the security’s quality. As a result, credit
rating downgrades or other market fluctuations may cause the Fund’s holdings of below-investment grade, fixed income securities
(also known as “junk” bonds) to become significant for an extended period of time.
The
Fund seeks to maintain a dollar-weighted average effective portfolio maturity
of four to ten years; however, it may purchase securities that have short, intermediate or long maturities.
The
Fund seeks to maintain a dollar-weighted average effective portfolio maturity
of four to ten years; however, it may purchase securities with short-, medium- or long-term maturities. The maturity of a security (the
date when its principal repayment is due) differs from its effective duration, which attempts to measure the expected sensitivity of a
security’s price to interest rate changes. “Effective duration” attempts to measure the expected percentage change
in the value of a bond or portfolio resulting from a change in prevailing interest rates. The change in the value of a bond or portfolio
can be approximated by multiplying its duration by a change in interest rates. For example, if a bond has an effective duration of three
years, a 1% increase in general interest rates would be expected to cause
the bond’s
value to decline about 3% while a 1% decrease in general interest rates would be expected to cause the bond’s value to increase
3%. Duration calculations rely on a number of assumptions and variables based on the historic performance of similar securities. Therefore,
duration can be affected by unexpected economic events or conditions relating to a particular security. In the case of mortgage-related
securities, duration calculations are based on historic rates of prepayments of underlying mortgages. If the mortgages underlying the
Fund’s investments are prepaid more rapidly or more slowly than expected, the duration calculation for that security may not be
correct.
The
Fund may purchase securities of issuers of any market capitalization.
The
Fund is managed by Invesco’s Fixed Income Factor Team (FIF). In selecting
securities for the portfolio, the Fund’s portfolio managers and FIF analysts utilize a factor-based strategy that involves systematically
targeting securities exhibiting quantifiable issuer characteristics (or “factors”) that FIF believes will have higher returns
than other fixed income securities with comparable characteristics over market cycles. The portfolio managers will consider selling securities
that no longer exhibit these factors. In practice, this means the Fund may have higher allocations to: value bonds (bonds that have high
spreads relative to other securities of similar credit quality and/or sector); low volatility bonds (bonds that have lower levels of price
volatility); and high carry bonds (bonds with higher absolute yield or spread). The portfolio managers expect to include additional factors
or modify the factors used to build the Fund’s portfolio as they deem appropriate. The portfolio managers will also seek to minimize
some of the residual risks associated with the higher allocations to the types of bonds mentioned above (such as duration and sector concentration),
including through the use of derivatives, as described below.
The
Fund may invest in foreign debt securities, including securities issued
by foreign governments or companies in developing and emerging markets, i.e., those that are generally in the early stages of their industrial
cycles, but may only invest up to 25% of its net assets in securities denominated in non-U.S. dollar currencies of which no more than
10% may remain unhedged. Foreign debt securities include obligations of issuers that are organized under the laws of a foreign country
or that have a substantial portion of their operations or assets in a foreign country or countries, or that derive a substantial portion
of their revenue or profits from businesses, investments or sales outside of the United States. Foreign debt securities also include debt
securities issued by foreign governments, as well as “supra-national” entities, such as the World Bank. The portfolio managers
may use derivatives to seek to hedge any foreign currency exposure.
The
Fund may invest in U.S. agency mortgage pass-through securities and
may seek to obtain such exposure primarily through the use of standardized agreements for forward or future delivery in which the actual
mortgage pools to be delivered are not specified until shortly prior to settlement (to be announced (TBA) transactions).
The
Fund may also use certain types of derivative investments for investment
purposes or for hedging, including: options, futures, forward contracts, swaps, “structured” notes and other types of derivatives.
A derivative is an instrument whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index
or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks. The Fund may use derivatives
to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment
objective or for hedging and might not do so.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between
6 Invesco
Intermediate Bond Factor Fund
counterparties.
The parties to the swap use variations in the value of the underlying asset to calculate payments between them through the life of the
swap. The Fund can use swap contracts, including interest rate swaps, to hedge or adjust its exposure to interest rates. The Fund can
also use swap contracts, including credit default swaps, to create long or short exposure to corporate or sovereign debt securities. The
Fund can further use swap contracts, including credit default index swaps, to hedge credit risk or take a position on a basket of credit
entities; total return swaps, to gain exposure to a reference asset; and volatility swaps to adjust the volatility profile of the Fund.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options, including currency options, to seek alpha (return
on investments in excess of the benchmark index) or to mitigate risk and to hedge against adverse movements in the foreign currencies
in which portfolio securities are denominated. The Fund can also use credit default swap options to gain the right to enter into a credit
default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage interest rate risk; and options
on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of the futures contract
tends to increaseand decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures
contracts are settled by purchasing an offsetting contract, physically delivering the underlying asset on the settlement date or paying
a cash settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures and Treasury futures,
to increase or reduce its exposure to interest rate changes. The Fund can also use currency futures to increase or decrease its exposure
to foreign currencies. The Fund can engage in foreign currency transactions either on a spot basis (i.e., for prompt delivery and settlement
at the rate prevailing in the currency exchange market at the time) or through forward foreign currency contracts to gain or mitigate
the risk of foreign currency exposure.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund buys or sells a security with payment and delivery taking place in the future. The payment obligation
and the interest rate are fixed at the time the Fund enters into the commitment. No income accrues on such securities until the date the
Fund actually takes delivery of the securities.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Credit
Quality Risk.
Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner.
7 Invesco
Intermediate Bond Factor Fund
They do not reflect
any judgment of market risk. Ratings and market value may change from time to time, positively or negatively, to reflect new developments
regarding the issuer. Rating organizations might not change their credit rating of an issuer in a timely manner to reflect events that
could affect the issuer’s ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating
their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business, economic
and other factors affecting issuers as well. Many factors affect an issuer’s ability to make timely payments, and the credit risk
of a particular security may change over time. The investment adviser also may use its own research and analysis to assess those risks.
If a bond is insured, it will usually be rated by the rating organizations based on the financial strength of the insurer. The rating
categories are described in an Appendix to the SAI.
Unrated
Securities Risk. The investment adviser may internally assign
ratings to securities that are not rated by any nationally recognized statistical rating organization, after assessing their credit quality
and other factors, in categories similar to those of nationally recognized statistical rating organizations. There can be no assurance,
nor is it intended, that the investment adviser’s credit analysis process is consistent or comparable with the credit analysis
process used by a nationally recognized statistical rating organization. Unrated securities are considered “investment-grade”
or “below-investment-grade” if judged by the investment adviser to be comparable to rated investment-grade or below-investment-grade
securities. The investment adviser’s rating does not constitute a guarantee of the credit quality. In addition, some unrated securities
may not have an active trading market or may trade less actively than rated securities, which means that the Fund might have difficulty
selling them promptly at an acceptable price.
In
evaluating the credit quality of a particular security, whether rated or unrated,
the investment adviser will normally take into consideration a number of factors such as, if applicable, the financial resources of the
issuer, the underlying source of funds for debt service on a security, the issuer’s sensitivity to economic conditions and trends,
any operating history of the facility financed by the obligation, the degree of community support for the financed facility, the capabilities
of the issuer’s management, and regulatory factors affecting the issuer or the particular facility.
A
reduction in the rating of a security after the Fund buys it will not require
the Fund to dispose of the security. However, the investment adviser will evaluate such downgraded securities to determine whether to
keep them in the Fund’s portfolio.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
Factor-Based
Investing Risk.
Although the Adviser uses a proprietary factor-based investment strategy designed to target securities exhibiting certain factor characteristics,
there is no guarantee the factor-based investment strategy will produce the desired outcomes. To the extent the factor-based investment
strategy or the information and data included therein are incorrect or incomplete, the decisions made by the Adviser in reliance thereon
will expose the Fund to potential risks and could lead to the Fund incurring losses on its investments. In addition, there may be periods
when a particular factor is out of favor and therefore, during such periods, the Fund may incur losses.
■
High
Carry Factor. Securities exhibiting a high carry factor are
subject to the risk that changes in interest rates, exchange rates or their term will affect their value.
■
Low
Volatility Factor. Low volatility securities are seen as
having a lower risk profile than the overall markets. However, a portfolio comprised of low volatility securities may not produce investment
exposure that has lower variability to changes in such securities’ price levels. Low volatility securities may also underperform
the broader market during periods of rapidly rising security prices.
■
Value
Factor. Value securities are subject to the risk that valuations
never improve or that the returns on value securities are less than returns on other styles of investing or the overall stock market.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt securities, which are not registered for sale pursuant to an exemption from
registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank,
8 Invesco
Intermediate Bond Factor Fund
depository or issuer
of a security, or any of their agents, goes bankrupt. Trading in many foreign securities may be less liquid and more volatile than U.S.
securities due to the size of the market or other factors. Changes in political and economic factors in one country or region could adversely
affect conditions in another country or region. Investments in foreign securities may also expose the Fund to time-zone arbitrage risk.
At times, the Fund may emphasize investments in a particular country or region and may be subject to greater risks from adverse events
that occur in that country or region. Unless the Fund has hedged its foreign currency exposure, foreign securities risk also involves
the risk of negative foreign currency rate fluctuations, which may cause the value of securities denominated in such foreign currency
(or other instruments through which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates may fluctuate
significantly over short periods of time. Currency hedging strategies, if used, are not always successful. For instance, currency forward
contracts, if used by the Fund, could reduce performance if there are unanticipated changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection, investigation and enforcement
capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted by
audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce
actions in emerging
market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may be difficult
or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries may
be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. A foreign government debtor’s willingness
or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign currency reserves, the availability of sufficient foreign exchange, the relative size of the debt burden, the foreign
government debtor’s policy toward its principal international lenders and local political constraints. Certain issuers of foreign
government debt may be dependent on disbursements from foreign governments, multinational agencies and other entities to reduce principal
and interest arrearages on their debt. Without the approval of debt holders, some governmental debtors have in the past been able to reschedule
or restructure their debt payments or declare moratoria on payments.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
TBA
Transactions Risk.
TBA transactions involve the risk that the securities received may be less favorable than what was anticipated by the Fund when entering
into the TBA transaction. TBA transactions also involve the risk that the counterparty will fail to deliver the securities, exposing the
Fund to further losses. Whether or not the Fund takes delivery of the securities at the termination date of a TBA transaction, the Fund
will nonetheless be exposed to changes in the value of the underlying investments during the term of the agreement.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall
9 Invesco
Intermediate Bond Factor Fund
and would make
the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly high rate of defaults on the mortgages
held by a mortgage pool will adversely affect the value of mortgage-backed securities and will result in losses to the Fund. Privately-issued
mortgage-backed securities and asset-backed securities may be less liquid than other types of securities and the Fund may be unable to
sell these securities at the time or price it desires. During periods of market stress or high redemptions, the Fund may be forced to
sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed
securities can become illiquid during periods of market stress. Privately-issued mortgage-related securities are not subject to the same
underwriting requirements for the underlying mortgages that are applicable to those mortgage-related securities that have government or
government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued mortgage-related securities may, and
frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting characteristics than government or government-sponsored
mortgage-related securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics.
The Fund may invest in mortgage pools that include subprime mortgages, which are loans made to borrowers with weakened credit histories
or with lower capacity to make timely payments on their mortgages. Liquidity risk is even greater for mortgage pools that include
subprime mortgages.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often
financial
institutions that may be unable or unwilling to buy or sell derivatives during times of financial or market stress. Derivative instruments
may therefore be less liquid than more traditional investments and the Fund may be unable to sell or exit its derivative positions at
a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating
its derivative positions. To the extent that the Fund is unable to exit a derivative position because of market illiquidity, the Fund
may not be able to prevent further losses of value in its derivatives holdings and the liquidity of the Fund and its ability to meet redemption
requests may be impaired to the extent that a substantial portion of the Fund’s otherwise liquid assets must be used as margin.
Another consequence of illiquidity is that the Fund may be required to hold a derivative instrument to maturity and take or make delivery
of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Contracts Risk. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. The precise matching
of the amounts under forward contracts and the value of the securities involved generally will not be possible because the future value
of securities denominated in foreign currencies will change as a consequence of market movements between the date the forward contract
is entered into and the date it is sold. Investments in forward contracts involve the risk that anticipated currency movements will not
be accurately predicted, causing the Fund to sustain losses on these contracts and to pay additional transaction costs.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Interest
Rate Swaps Risk. Interest rate swaps are subject to
interest rate risk and credit risk. An interest rate swap transaction could result in losses if the underlying asset or reference rate
does not perform as anticipated. Interest rate swaps are also subject to counterparty risk. If the counterparty fails to meet its obligations,
the Fund may lose money.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
“Structured”
Notes Risk. Structured notes are subject to interest rate
risk. They are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or obligor.
If the underlying investment or index does not perform as anticipated, the structured note might pay less interest than the stated coupon
payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading
market, making it difficult to value them or sell them at an acceptable
10 Invesco
Intermediate Bond Factor Fund
price.
In some cases, the Fund may enter into agreements with an issuer of structured notes to purchase a minimum amount of those notes over
time.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted for clearing to a central clearing house counterparty, and the Fund faces
the central clearing house counterparty by means of an account with a futures commission merchant that is a member of the clearing house.
■
Volatility
Swaps Risks. Volatility swaps are subject to credit risks
(if the counterparty fails to meet its obligations), and the risk that the investment adviser is incorrect in its forecast of volatility
for the underlying security, currency, index or other financial instrument that is the subject of the swap. If the investment adviser
is incorrect in its forecast, the Fund would likely be required to make a payment to the counterparty under the swap. Volatility swaps
can have the potential for unlimited losses.
■
Credit
Default Swaps Risk. A credit default swap enables an investor
to buy or sell protection against a credit event with respect to an issuer, such as an issuer’s failure to make timely payments
of interest or principal on its debt obligations, bankruptcy or restructuring. A credit default swap may be embedded within a structured
note or other derivative instrument. Credit default swaps are subject to credit risk of the underlying issuer and to counterparty
credit risk. If the counterparty fails to meet its obligations, the Fund may lose money. Credit default swaps are also subject to the
risk that the Fund will not properly assess the risk of the underlying issuer. If the Fund is selling credit protection, there is a risk
that a credit event will occur and that the Fund will have to pay the counterparty. If the Fund is buying credit protection, there is
a risk that no credit event will occur and the Fund will receive no benefit for the premium paid.
■
Total
Return Swaps Risk. In a total return swap transaction, one
party agrees to pay the other party an amount equal to the total return on a defined underlying asset or a non-asset reference during
a specified period of time. The underlying asset might be a security or asset or basket of securities or assets or a non-asset reference
such as a securities or other type of index. In return, the other party would make periodic payments based on a fixed or variable interest
rate or on the total return from a different underlying asset or non-asset reference. Total return swaps could result in losses if
the underlying asset or reference does not perform as anticipated. Total return swaps can have the potential for unlimited losses. They
are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or
market
segment, in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an
instrument which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited
by the requirements for taxation of the Fund as a regulated investment company.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market value due to adverse economic, regulatory,
political or company developments than higher rated or investment grade securities. Prices of high yield debt securities tend to be very
volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable time or price,
particularly in times of negative sentiment toward high yield securities.
Active
Trading Risk.
Active trading of portfolio securities may result in high brokerage costs, which may lower the Fund’s actual return. Active trading
also may increase the proportion of the Fund’s gains that are short term, which are taxed at a higher rate than long term
gains.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or
less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to
counterparty risk because it relies on the buyer or seller, as the case may be, to consummate the transaction, and failure by the counterparty
to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous.
These transactions have a leveraging effect on the Fund because the Fund commits to purchase securities that it does not have to pay for
until a later date. These investments therefore increase the Fund’s overall investment exposure and, as a result, its volatility.
Typically, no income accrues on securities the Fund has committed to purchase prior to the time delivery of the securities is made.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available to the Adviser in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve
its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco
serves as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment
portfolios that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s
day-to-day management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor
in interest to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the
11 Invesco
Intermediate Bond Factor Fund
Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Potential
New Sub-Advisers (Exemptive Order Structure). The SEC has
also granted exemptive relief that permits the Adviser, subject to certain conditions, to enter into new sub-advisory agreements with
affiliated or unaffiliated sub-advisers on behalf of the Fund without shareholder approval. The exemptive relief also permits material
amendments to existing sub-advisory agreements with affiliated or unaffiliated sub-advisers (including the Sub-Advisory Agreements with
the Sub-Advisers) without shareholder approval. Under this structure, the Adviser has ultimate responsibility, subject to oversight of
the Board, for overseeing such sub-advisers and recommending to the Board their hiring, termination, or replacement. The structure does
not permit investment advisory fees paid by the Fund to be increased without shareholder approval, or change the Adviser's obligations
under the investment advisory agreement, including the Adviser's responsibility to monitor and oversee sub-advisory services furnished
to the Fund.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund’s SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps
markets. The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies
or this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser did not receive any compensation from the Fund’s, after fee waiver and/or
expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Noelle
Corum, CFA, Portfolio Manager, who has been responsible for the Fund since 2020 and has been associated with Invesco and/or its affiliates
since 2010.
■
Jacob
Habibi, CFA, Portfolio Manager, who has been responsible for the Fund since 2023 and has been associated with Invesco and/or its affiliates
since 2001.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers'
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 4.25% initial sales charge as listed under the heading “Category II Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a
commission at the time of purchase. For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred
Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist of ordinary income, capital gains, or some
combination of both.
Dividends
The Fund generally
declares and pays dividends from net investment income, if any, monthly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
12 Invesco
Intermediate Bond Factor Fund
The financial highlights
information presented for the Fund includes the financial history of the predecessor fund, which was reorganized into the Fund after the
close of business on May 24, 2019. The financial highlights show the Fund’s and predecessor fund’s financial history for
the past five fiscal years or, if shorter, the applicable period of operations since the inception of the Fund or predecessor fund or class
of Fund or predecessor fund shares. The financial highlights table is intended to help you understand the Fund’s and the predecessor
fund’s financial performance. Certain information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund or predecessor fund (assuming reinvestment of all dividends and distributions). This information
has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with the Fund’s
financial statements, is included in the Fund’s annual report, which is available upon request. Effective August 31, 2019, the
Fund changed its fiscal year end from July 31 to the last day of February.
|
|
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
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee
waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed(c) |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(d)
|
|
Class
A | |||||||||||||||
|
Year
ended 02/29/24 |
$9.10
|
$0.30
|
$0.05
|
$0.35
|
$(0.29
) |
$—
|
$—
|
$(0.29
) |
$9.16
|
3.90
%(e)
|
$98,542
|
0.53
%(e)
|
0.85
%(e)
|
3.32
%(e)
|
276
% |
|
Year
ended 02/28/23 |
10.45
|
0.20
|
(1.20
) |
(1.00
) |
(0.24
) |
—
|
(0.11
) |
(0.35
) |
9.10
|
(9.62
)(e)
|
94,721
|
0.52
(e)
|
0.81
(e)
|
2.06
(e)
|
301
|
|
Year
ended 02/28/22 |
10.93
|
0.13
|
(0.43
) |
(0.30
) |
(0.18
) |
—
|
—
|
(0.18
) |
10.45
|
(2.80
)(e)
|
118,156
|
0.52
(e)
|
0.71
(e)
|
1.18
(e)
|
207
|
|
Year
ended 02/28/21 |
11.27
|
0.16
|
0.10
|
0.26
|
(0.21
) |
(0.39
) |
—
|
(0.60
) |
10.93
|
2.30
(e)
|
132,856
|
0.52
(e)
|
0.96
(e)
|
1.42
(e)
|
292
|
|
Seven
months ended 02/29/20 |
10.88
|
0.18
|
0.40
|
0.58
|
(0.19
) |
—
|
—
|
(0.19
) |
11.27
|
5.39
|
122,371
|
1.05
(f)
|
1.05
(f)
|
2.80
(f)
|
64
|
|
Year
ended 07/31/19 |
10.43
|
0.32
|
0.45
|
0.77
|
(0.32
) |
—
|
—
|
(0.32
) |
10.88
|
7.52
|
119,300
|
0.97
|
0.97
|
3.07
|
108
|
|
| |||||||||||||||
|
Class
C | |||||||||||||||
|
Year
ended 02/29/24 |
9.10
|
0.23
|
0.05
|
0.28
|
(0.22
) |
—
|
—
|
(0.22
) |
9.16
|
3.13
|
10,188
|
1.28
|
1.61
|
2.57
|
276
|
|
Year
ended 02/28/23 |
10.45
|
0.12
|
(1.20
) |
(1.08
) |
(0.19
) |
—
|
(0.08
) |
(0.27
) |
9.10
|
(10.31
) |
10,003
|
1.27
|
1.57
|
1.31
|
301
|
|
Year
ended 02/28/22 |
10.93
|
0.05
|
(0.43
) |
(0.38
) |
(0.10
) |
—
|
—
|
(0.10
) |
10.45
|
(3.53
) |
14,724
|
1.27
|
1.47
|
0.43
|
207
|
|
Year
ended 02/28/21 |
11.26
|
0.08
|
0.10
|
0.18
|
(0.12
) |
(0.39
) |
—
|
(0.51
) |
10.93
|
1.56
|
19,013
|
1.27
|
1.72
|
0.67
|
292
|
|
Seven
months ended 02/29/20 |
10.87
|
0.12
|
0.40
|
0.52
|
(0.13
) |
—
|
—
|
(0.13
) |
11.26
|
4.80
|
23,114
|
1.81
(f)
|
1.81
(f)
|
1.90
(f)
|
64
|
|
Year
ended 07/31/19 |
10.43
|
0.23
|
0.44
|
0.67
|
(0.23
) |
—
|
—
|
(0.23
) |
10.87
|
6.52
|
23,487
|
1.72
|
1.72
|
2.17
|
108
|
|
| |||||||||||||||
|
Class
R | |||||||||||||||
|
Year
ended 02/29/24 |
9.11
|
0.28
|
0.05
|
0.33
|
(0.27
) |
—
|
—
|
(0.27
) |
9.17
|
3.64
|
18,498
|
0.78
|
1.11
|
3.07
|
276
|
|
Year
ended 02/28/23 |
10.45
|
0.17
|
(1.19
) |
(1.02
) |
(0.22
) |
—
|
(0.10
) |
(0.32
) |
9.11
|
(9.75
) |
17,545
|
0.77
|
1.07
|
1.81
|
301
|
|
Year
ended 02/28/22 |
10.93
|
0.10
|
(0.43
) |
(0.33
) |
(0.15
) |
—
|
—
|
(0.15
) |
10.45
|
(3.04
) |
18,987
|
0.77
|
0.97
|
0.93
|
207
|
|
Year
ended 02/28/21 |
11.27
|
0.13
|
0.10
|
0.23
|
(0.18
) |
(0.39
) |
—
|
(0.57
) |
10.93
|
2.02
|
19,876
|
0.77
|
1.22
|
1.17
|
292
|
|
Seven
months ended 02/29/20 |
10.88
|
0.15
|
0.40
|
0.55
|
(0.16
) |
—
|
—
|
(0.16
) |
11.27
|
5.09
|
20,366
|
1.31
(f)
|
1.31
(f)
|
2.40
(f)
|
64
|
|
Year
ended 07/31/19 |
10.44
|
0.28
|
0.44
|
0.72
|
(0.28
) |
—
|
—
|
(0.28
) |
10.88
|
7.06
|
20,511
|
1.22
|
1.22
|
2.67
|
108
|
|
| |||||||||||||||
|
Class
Y | |||||||||||||||
|
Year
ended 02/29/24 |
9.10
|
0.33
|
0.03
|
0.36
|
(0.31
) |
—
|
—
|
(0.31
) |
9.15
|
4.05
|
70,445
|
0.28
|
0.61
|
3.57
|
276
|
|
Year
ended 02/28/23 |
10.44
|
0.22
|
(1.19
) |
(0.97
) |
(0.26
) |
—
|
(0.11
) |
(0.37
) |
9.10
|
(9.30
) |
56,121
|
0.27
|
0.57
|
2.31
|
301
|
|
Year
ended 02/28/22 |
10.92
|
0.15
|
(0.42
) |
(0.27
) |
(0.21
) |
—
|
—
|
(0.21
) |
10.44
|
(2.56
) |
29,184
|
0.27
|
0.47
|
1.43
|
207
|
|
Year
ended 02/28/21 |
11.26
|
0.19
|
0.10
|
0.29
|
(0.24
) |
(0.39
) |
—
|
(0.63
) |
10.92
|
2.58
|
17,750
|
0.27
|
0.72
|
1.67
|
292
|
|
Seven
months ended 02/29/20 |
10.88
|
0.20
|
0.40
|
0.60
|
(0.22
) |
—
|
—
|
(0.22
) |
11.26
|
5.55
|
19,032
|
0.81
(f)
|
0.81
(f)
|
3.09
(f)
|
64
|
|
Year
ended 07/31/19 |
10.43
|
0.35
|
0.45
|
0.80
|
(0.35
) |
—
|
—
|
(0.35
) |
10.88
|
7.81
|
20,940
|
0.73
|
0.73
|
3.37
|
108
|
|
| |||||||||||||||
|
Class
R5 | |||||||||||||||
|
Year
ended 02/29/24 |
9.10
|
0.32
|
0.05
|
0.37
|
(0.31
) |
—
|
—
|
(0.31
) |
9.16
|
4.16
|
9
|
0.28
|
0.44
|
3.57
|
276
|
|
Year
ended 02/28/23 |
10.44
|
0.22
|
(1.19
) |
(0.97
) |
(0.26
) |
—
|
(0.11
) |
(0.37
) |
9.10
|
(9.30
) |
9
|
0.27
|
0.41
|
2.31
|
301
|
|
Year
ended 02/28/22 |
10.92
|
0.16
|
(0.43
) |
(0.27
) |
(0.21
) |
—
|
—
|
(0.21
) |
10.44
|
(2.56
) |
10
|
0.27
|
0.37
|
1.43
|
207
|
|
Year
ended 02/28/21 |
11.27
|
0.19
|
0.09
|
0.28
|
(0.24
) |
(0.39
) |
—
|
(0.63
) |
10.92
|
2.49
|
10
|
0.27
|
0.47
|
1.67
|
292
|
|
Seven
months ended 02/29/20 |
10.87
|
0.20
|
0.40
|
0.60
|
(0.20
) |
—
|
—
|
(0.20
) |
11.27
|
5.59
|
11
|
0.60
(f)
|
0.60
(f)
|
3.09
(f)
|
64
|
|
Period
ended 07/31/19(g)
|
10.67
|
0.07
|
0.19
|
0.26
|
(0.06
) |
—
|
—
|
(0.06
) |
10.87
|
2.44
|
10
|
0.62
(f)
|
0.62
(f)
|
3.39
(f)
|
108
|
|
| |||||||||||||||
|
Class
R6 | |||||||||||||||
|
Year
ended 02/29/24 |
9.10
|
0.33
|
0.04
|
0.37
|
(0.31
) |
—
|
—
|
(0.31
) |
9.16
|
4.16
|
17,088
|
0.28
|
0.44
|
3.57
|
276
|
|
Year
ended 02/28/23 |
10.44
|
0.22
|
(1.19
) |
(0.97
) |
(0.26
) |
—
|
(0.11
) |
(0.37
) |
9.10
|
(9.30
) |
12,072
|
0.27
|
0.41
|
2.31
|
301
|
|
Year
ended 02/28/22 |
10.92
|
0.16
|
(0.43
) |
(0.27
) |
(0.21
) |
—
|
—
|
(0.21
) |
10.44
|
(2.56
) |
17,022
|
0.27
|
0.37
|
1.43
|
207
|
|
Year
ended 02/28/21 |
11.27
|
0.19
|
0.09
|
0.28
|
(0.24
) |
(0.39
) |
—
|
(0.63
) |
10.92
|
2.49
|
8,392
|
0.27
|
0.47
|
1.67
|
292
|
|
Seven
months ended 02/29/20 |
10.88
|
0.20
|
0.40
|
0.60
|
(0.21
) |
—
|
—
|
(0.21
) |
11.27
|
5.60
|
5,795
|
0.58
(f)
|
0.58
(f)
|
3.14
(f)
|
64
|
|
Year
ended 07/31/19 |
10.44
|
0.36
|
0.43
|
0.79
|
(0.35
) |
—
|
—
|
(0.35
) |
10.88
|
7.80
|
5,662
|
0.56
|
0.56
|
3.41
|
108
|
|
| |||||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns
based
upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges
and is not annualized for periods less than one
year,
if applicable. |
|
(c)
|
Does
not include indirect expenses from affiliated fund fees and expenses of 0.02% for the seven months ended February 29, 2020 and the year
ended July 31, 2019. |
13 Invesco
Intermediate Bond Factor Fund
|
(d)
|
Portfolio
turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the seven months ended
February 29, 2020, the portfolio turnover calculation
excludes
purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $11,531,839 and 13,476,801, respectively. For the
year ended July 31, 2019, the portfolio
turnover
calculation excludes purchase and sale transactions of TBA mortgage-related securities of $129,169,490 and $127,412,648, respectively.
|
|
(e)
|
The
total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees
of 0.24% for the year ended February 29, 2024 and
0.24%
for the years ended February 28, 2023, 2022 and 2021, respectively. |
|
(f)
|
Annualized.
|
|
(g)
|
Commencement
date after the close of business on May 24, 2019. |
14 Invesco
Intermediate Bond Factor Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Intermediate Bond Factor Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
O-INTI-PRO-1
|
Prospectus
June 28, 2024
Class:
A (IARAX), C (IARCX), Investor (REINX), R (IARRX), Y (IARYX), R5 (IARIX), R6 (IARFX)
Invesco
Real Estate Fund
Investor
Class shares of the Fund are offered only to grandfathered investors.
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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Back
Cover |
Invesco
Real Estate Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is total return through growth of capital and current income.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares – Purchase and Redemption of Shares” on page
L-1 of the statement of additional information (SAI).
|
Class:
|
A
|
C
|
R
|
Y
|
Investor
|
R5
|
R6
|
|
Management
Fees |
0.73
% |
0.73
% |
0.73
% |
0.73
% |
0.73
% |
0.73
% |
0.73
% |
|
| |||||||
|
Distribution
and/or Service (12b-1)
Fees
|
0.25
|
1.00
|
0.50
|
None
|
0.20
|
None
|
None
|
|
| |||||||
|
Other
Expenses |
0.27
|
0.27
|
0.27
|
0.27
|
0.27
|
0.14
|
0.07
|
|
| |||||||
|
Total
Annual Fund Operating
Expenses
|
1.25
|
2.00
|
1.50
|
1.00
|
1.20
|
0.87
|
0.80
|
|
| |||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 62%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in securities of real estate
and real estate-related issuers, and in derivatives and other instruments that have economic characteristics similar to such securities.
The Fund invests primarily in real estate investment trusts
(REITs) and equity securities, including common and preferred stock and convertible securities.
The
Fund concentrates its investments in the securities of domestic and foreign
real estate and real estate-related companies. The Fund considers an issuer to be a real estate or real estate-related company if at least
50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial
or industrial real estate. These issuers include (i) REITs or other real estate operating companies that (a) own property, (b) make
or invest in short-term construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools, and
(ii) issuers whose products and services are related to the real estate industry, such as manufacturers and distributors of building
supplies and financial institutions that issue or service mortgages.
The
Fund may also invest in debt securities, including corporate debt obligations
and commercial mortgage-backed securities. The Fund may invest up to 10% of its net assets in non-investment grade debt securities (commonly
known as “junk bonds”) of real estate and real estate-related issuers.
The
Fund may invest in securities of issuers of all capitalization sizes. Real
estate companies tend to have smaller asset bases compared with other market sectors, therefore, the Fund may hold a significant amount
of securities of small- and mid-capitalization issuers.
The
Fund may invest up to 25% of its net assets in foreign securities. In regard
to foreign security holdings, up to 10% of the Fund’s net assets may be in securities of issuers located in emerging market countries,
i.e., those that are generally in the early stages of their industrial cycles.
The
Fund may engage in short sales of securities. The Fund may engage
in short sales with respect to securities it owns or securities it does not own. Generally, the Fund will sell a security short to (1) take
advantage of an expected decline in the security price in anticipation of purchasing the same security at a later date at a lower price,
or (2) to protect a profit in a security that it owns. The Fund will not sell a security short if, as a result of such short sale,
the aggregate market value of all securities sold short exceeds 10% of the Fund’s net assets.
1 Invesco
Real Estate Fund
The
Fund can invest in derivative instruments including forward foreign currency
contracts.
The
Fund can use forward foreign currency contracts to hedge against adverse
movements in the foreign currencies in which portfolio securities are denominated; though the Fund has not historically used these instruments.
When
constructing the portfolio, the portfolio managers use a fundamentals-driven
investment process, including an evaluation of factors such as property market cycle analysis, property evaluation and management and
structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management
teams with the ability to effectively manage capital structure decisions and execute their stated strategic plan, and (iii) attractive
valuations relative to peer investment alternatives.
The
portfolio managers focus on equity REITs and real estate operating issuers.
Each qualified security in the investment universe is analyzed using fundamental real estate analysis and valuation review to identify
securities that appear to have relatively favorable long-term prospects and attractive values. Some of the fundamental real estate factors
that are considered include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property
locations, physical attributes, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing
and fixed charge coverage ratios. The issuers that are believed to have the most attractive fundamental real estate attributes are then
evaluated on the basis of relative value. Some of the valuation factors that are considered include: cash flow consistency and growth,
dividend yield, dividend coverage and growth, and cash flow and assets to price multiples.
The
portfolio managers seek to construct a portfolio with risk characteristics
similar to the FTSE Nareit All Equity REITs Index. The Fund uses this index as a guide in structuring the portfolio, but the Fund is not
an index fund.
The
portfolio managers seek to limit risk through various controls, such as
diversifying the portfolio property types and geographic areas as well as by considering the relative liquidity of each security and limiting
the size of any one holding.
The
portfolio managers will consider selling a security if they conclude (1) its
relative valuation has fallen below desired levels, (2) its risk/return profile has changed significantly, (3) its fundamentals
have changed, or (4) a more attractive investment opportunity is identified.
As
part of the Fund’s investment process to implement its investment strategy
in pursuit of its investment objective, the Fund’s portfolio managers may also consider both qualitative and quantitative environmental,
social and governance (ESG) factors they believe to be material to understand an issuer’s fundamentals, assess whether any ESG
factors pose a material financial risk or opportunity to the issuer and determine whether such risks are appropriately reflected in the
issuer’s valuation. This analysis may involve the use of third-party research as well as proprietary research. Consideration of
ESG factors is just one component of the portfolio managers' assessment of issuers eligible for investment and not necessarily determinative
to an investment decision. Therefore, the Fund’s portfolio managers may still invest in securities of issuers that may be viewed
as having a high ESG risk profile. The ESG factors considered by the Fund’s portfolio managers may change over time, one or more
factors may not be relevant with respect to all issuers eligible for investment and ESG considerations may not be applied to each issuer
or Fund investment.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
REIT
Risk/Real Estate Risk.
Investments in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological
factors that affect property values, rents or occupancies. Shares of real estate related companies, which tend to be small- and mid-cap
companies, may be more volatile and less liquid than larger companies. If a real estate related company defaults on certain types of debt
obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks such as environmental liabilities;
difficulty in valuing and selling the real estate; and economic or regulatory changes.
Investing
in Stocks Risk.
The value of the Fund’s portfolio may be affected by changes in the stock markets. Stock markets may experience significant short-term
volatility and may fall or rise sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected
negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move
in the opposite direction from one or more foreign stock markets.
The
prices of individual stocks generally do not all move in the same direction
at the same time. However, individual stock prices tend to go up and down more dramatically than those of certain other types of investments,
such as bonds. A variety of factors can negatively affect the price of a particular company’s stock. These factors may include,
but are not limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of
the company’s sector or industry, or changes in government regulations affecting the company or its industry. To the extent that
securities of a particular type are emphasized (for example foreign stocks, stocks of small- or mid-cap companies, growth or value stocks,
or stocks of companies in a particular industry), fund share values may fluctuate more in response to events affecting the market for
those types of securities.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events,
and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade and therefore considered
to have more speculative characteristics and greater susceptibility to default or decline in market value than investment grade securities.
Small-
and Mid-Capitalization Companies Risk.
Investing in securities of small- and mid-capitalization companies involves greater risk
2 Invesco
Real Estate Fund
than
customarily is associated with investing in larger, more established companies. Stocks of small- and mid-capitalization companies tend
to be more vulnerable to changing market conditions, may have little or no operating history or track record of success, and may have
more limited product lines and markets, less experienced management and fewer financial resources than larger companies. These companies’
securities may be more volatile and less liquid than those of more established companies. They may be more sensitive to changes in a company’s
earnings expectations and may experience more abrupt and erratic price movements. Smaller companies’ securities often trade in
lower volumes and in many instances, are traded over-the-counter or on a regional securities exchange, where the frequency and volume
of trading is substantially less than is typical for securities of larger companies traded on national securities exchanges. Therefore,
the securities of smaller companies may be subject to wider price fluctuations and it might be harder for the Fund to dispose of its holdings
at an acceptable price when it wants to sell them. Since small- and mid-cap companies typically reinvest a high proportion of their earnings
in their business, they may not pay dividends for some time, particularly if they are newer companies. It may take a substantial period
of time to realize a gain on an investment in a small- or mid-cap company, if any gain is realized at all.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these
securities
at significantly reduced prices, resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can
become illiquid during periods of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting
requirements as those with government or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued
mortgage-related securities may have less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and
wider variances in interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include
subprime mortgages, which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments
on their mortgages. Liquidity risk is even greater for mortgage pools that include subprime mortgages.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities
denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value.
Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to
evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the
3 Invesco
Real Estate Fund
use
of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is
the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Short
Position Risk.
Because the Fund’s potential loss on a short position arises from increases in the value of the asset sold short, the Fund will
incur a loss on a short position, which is theoretically unlimited, if the price of the asset sold short increases from the short sale
price. The counterparty to a short position or other market factors may prevent the Fund from closing out a short position at a desirable
time or price and may reduce or eliminate any gain or result in a loss. In a rising market, the Fund’s short positions will cause
the Fund to underperform the overall market and its peers that do not engage in shorting. If the Fund holds both long and short positions,
and both positions decline simultaneously, the short positions will not provide any buffer (hedge) from declines in value of the Fund’s
long positions. Certain types of short positions involve leverage, which may exaggerate any losses, potentially more than the actual cost
of the investment, and will increase the volatility of the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
of its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s portfolio will not
be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused issuers.
The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended.
The Fund may underperform other funds that do not assess an issuer’s ESG factors or that use a different methodology to identify
and/or incorporate ESG factors. Information used by the Fund to evaluate such factors may not be readily available, complete or accurate,
and may vary across providers and issuers as ESG is not a uniformly defined characteristic. There is no guarantee that the evaluation
of ESG considerations will be additive to the Fund’s performance.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s or Sub-Adviser's judgment about markets, interest rates or the
attractiveness, relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio.
The Fund could experience losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s or Sub-Adviser's
investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments
may adversely affect management of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and
a broad-based securities market benchmark (in that order).
The Fund's past performance (before and after taxes)
is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
Annual Total Returns
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
|
Class
A |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
-1.91%
|
|
Best
Quarter |
March
31, 2019 |
16.92%
|
|
Worst
Quarter |
March
31, 2020 |
-24.40%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A |
|
|
|
|
|
Return
Before Taxes |
12/31/1996
|
2.74
% |
4.44
% |
5.77
% |
|
Return
After Taxes on Distributions |
|
1.54
|
2.44
|
3.44
|
|
Return
After Taxes on Distributions and Sale of
Fund
Shares |
|
1.77
|
3.09
|
4.05
|
|
| ||||
|
Class
C |
5/1/1995
|
6.89
|
4.81
|
5.73
|
|
| ||||
|
Class
R |
4/30/2004
|
8.52
|
5.35
|
6.10
|
|
| ||||
|
Class
Y |
10/3/2008
|
9.04
|
5.88
|
6.63
|
|
| ||||
|
Investor
Class |
9/30/2003
|
8.85
|
5.66
|
6.39
|
|
| ||||
|
Class
R5 |
4/30/2004
|
9.19
|
6.01
|
6.77
|
|
| ||||
|
Class
R6 |
9/24/2012
|
9.21
|
6.09
|
6.85
|
|
| ||||
|
FTSE
Nareit All Equity REITs Index (reflects
no
deduction
for fees, expenses or taxes) |
|
11.36
|
7.59
|
7.95
|
|
| ||||
|
S&P
500®
Index (reflects no deduction for fees,
expenses
or taxes) |
|
26.29
|
15.69
|
12.03
|
|
| ||||
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors
who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual retirement
accounts. After-tax
returns are shown for Class A shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Investment
Sub-Adviser: Invesco Asset Management Limited (Invesco Asset
4 Invesco
Real Estate Fund
Management)
|
Portfolio
Managers |
Title
|
Length
of Service on the Fund |
|
James
Cowen |
Portfolio
Manager |
2015
|
|
| ||
|
Grant
Jackson, CFA |
Portfolio
Manager |
2018
|
|
| ||
|
Darin
Turner |
Portfolio
Manager |
2009
|
|
| ||
|
Ping-Ying
Wang, CFA |
Portfolio
Manager |
2006
|
|
| ||
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Investor
Class shares of the Fund are offered only to grandfathered investors.
The minimum investments for Class A, C, R, Y and Investor Class shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through
a tax-advantaged arrangement, such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from
a 401(k) plan or individual retirement account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related
services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson or financial adviser
to recommend the Fund over another investment. Ask your salesperson or financial adviser or visit your financial intermediary’s
website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is total return through growth of capital and current income. The Fund’s investment objective may be changed
by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in securities of real estate and real estate-related issuers, and in derivatives and other
instruments that have economic characteristics similar to such securities. The Fund invests primarily in REITs and equity securities.
The principal types of equity securities in which the Fund invests are common and preferred stocks and convertible securities.
REITs
are entities that sell equity or debt securities to investors and use the
proceeds to invest in real estate or interests therein.
The
Fund concentrates its investments in the securities of domestic and foreign
real estate and real estate-related companies. The Fund considers an issuer to be a real estate or real estate-related company if at least
50% of its assets, gross income or net profits are attributable to ownership, construction, management or sale of residential, commercial
or industrial real estate. These issuers include (i) REITs or other real estate operating companies that (a) own property, (b) make
or invest in short-term construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools, and
(ii) issuers whose products and services are related to the real estate industry, such as manufacturers and distributors of building
supplies and financial institutions that issue or service mortgages.
The
Fund may also invest in debt securities, including corporate debt obligations
and commercial mortgage-backed securities. The Fund may invest up to 10% of its net assets in non-investment grade debt securities (commonly
known as “junk bonds”) of real estate and real estate-related issuers. Investment grade securities are: (i) securities
rated BBB- or higher by S&P Global Ratings (S&P) or Baa3 or higher by Moody’s Investors
Service, Inc. (Moody’s) or an equivalent rating by
another nationally recognized statistical rating organization (NRSRO), (ii) securities with comparable short-term NRSRO ratings,
or (iii) unrated securities determined by the Adviser to be of comparable quality, each at the time of purchase.
The
Fund may invest in securities of issuers of all capitalization sizes. Real
estate companies tend to have smaller asset bases compared with other market sectors, therefore, the Fund may hold a significant amount
of securities of small- and mid-capitalization issuers.
The
Fund considers an issuer to be a small-capitalization issuer if it has a
market capitalization, at the time of purchase, no larger than the largest capitalized issuer included in the Russell 2000®
Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month.
The
Fund considers an issuer to be a mid-capitalization issuer if it has a market
capitalization, at the time of purchase, within the range of market capitalizations of the largest and smallest capitalized issuers included
in the Russell Midcap®
Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. A company’s
“market capitalization” is the value of its outstanding stock.
The
Fund may invest up to 25% of its net assets in foreign securities. In regard
to foreign security holdings, up to 10% of the Fund’s net assets may
5 Invesco
Real Estate Fund
be in securities
of issuers located in emerging market countries, i.e., those that are generally in the early stages of their industrial cycles.
The
Fund may engage in short sales of securities. A short sale occurs when
the Fund sells a security, but does not deliver a security it owns when the sale settles. Instead, it borrows that security for delivery
when the sale settles. The Fund may engage in short sales with respect to securities it owns or securities it does not own. Generally,
the Fund will sell a security short to (1) take advantage of an expected decline in the security price in anticipation of purchasing
the same security at a later date at a lower price, or (2) to protect a profit in a security that it owns. The Fund will not sell
a security short if, as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the Fund’s
net assets.
The
Fund can invest in derivative instruments including forward foreign currency
contracts.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. The Fund can use forward foreign currency contracts to
hedge against adverse movements in the foreign currencies in which portfolio securities are denominated; though the Fund has not historically
used these instruments.
When
constructing the portfolio, the portfolio managers use a fundamentals-driven
investment process, including an evaluation of factors such as property market cycle analysis, property evaluation and management and
structure review to identify securities with characteristics including (i) quality underlying properties, (ii) solid management
teams with the ability to effectively manage capital structure decisions and execute their stated strategic plan, and (iii) attractive
valuations relative to peer investment alternatives.
The
portfolio managers focus on equity REITs and real estate operating issuers.
Each qualified security in the investment universe is analyzed using fundamental real estate analysis and valuation review to identify
securities that appear to have relatively favorable long-term prospects and attractive values. Some of the fundamental real estate factors
that are considered include: forecasted occupancy and rental rates of the various property markets in which a firm may operate, property
locations, physical attributes, management depth and skill, insider ownership, overall debt levels, percentage of variable rate financing
and fixed charge coverage ratios. The issuers that are believed to have the most attractive fundamental real estate attributes are then
evaluated on the basis of relative value. Some of the valuation factors that are considered include: cash flow consistency and growth,
dividend yield, dividend coverage and growth, and cash flow and assets to price multiples.
The
portfolio managers seek to construct a portfolio with risk characteristics
similar to the FTSE Nareit All Equity REITs Index. The Fund uses this index as a guide in structuring the portfolio, but the Fund is not
an index fund.
The
portfolio managers seek to limit risk through various controls, such as
diversifying the portfolio property types and geographic areas as well as by considering the relative liquidity of each security and limiting
the size of any one holding.
The
portfolio managers will consider selling a security if they conclude (1)
its relative valuation has fallen below desired levels, (2) its risk/return profile has changed significantly, (3) its fundamentals
have changed, or (4) a more attractive investment opportunity is identified.
As
part of the Fund’s investment process to implement its investment strategy
in pursuit of its investment objective, the Fund’s portfolio managers may also consider both qualitative and quantitative environmental,
social and governance (ESG) factors they believe to be material to understand an issuer’s fundamentals, assess whether any ESG
factors pose a material financial risk or opportunity to the issuer and determine whether such risks are appropriately reflected in the
issuer’s valuation. This analysis may involve the use of third-party research as well as proprietary research. Consideration of
ESG factors is just one component of the portfolio managers' assessment of issuers eligible for investment and not necessarily
determinative to
an investment decision. Therefore, the Fund’s portfolio managers may still invest in securities of issuers that may be viewed as
having a high ESG risk profile. The ESG factors considered by the Fund’s portfolio managers may change over time, one or more factors
may not be relevant with respect to all issuers eligible for investment and ESG considerations may not be applied to each issuer or Fund
investment.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
REIT
Risk/Real Estate Risk. Investments
in real estate related instruments may be adversely affected by economic, legal, cultural, environmental or technological factors that
affect property values, rents or occupancies. Real estate companies, including REITs or similar structures, tend to be small- and mid-cap
companies and their shares may be more volatile and less liquid than larger companies. The value of investments in
6 Invesco
Real Estate Fund
real estate related
companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage and financial covenants
related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related company defaults on
certain types of debt obligations held by the Fund, the Fund may acquire real estate directly, which involves additional risks such as
environmental liabilities; difficulty in valuing and selling the real estate; and economic or regulatory changes.
Investing
in Stocks Risk. Common stock represents an ownership interest
in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation
or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than
exchange-traded securities.
The
value of the Fund’s portfolio may be affected by changes in the stock
markets. Stocks and other equity securities fluctuate in price in response to changes to equity markets in general. Stock markets may
experience significant short-term volatility and may fall or rise sharply at times. Adverse events in any part of the equity or fixed-income
markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other
and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.
The
prices of individual stocks generally do not all move in the same direction
at the same time. However, individual stock prices tend to go up and down more dramatically than those of certain other types of investments,
such as bonds. A variety of factors can negatively affect the price of a particular company’s stock. These factors may include,
but are not limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of
the company’s sector or industry, or changes in government regulations affecting the company or its industry. To the extent that
securities of a particular type are emphasized (for example foreign stocks, stocks of small- or mid-cap companies, growth or value stocks,
or stocks of companies in a particular industry), fund share values may fluctuate more in response to events affecting the market for
those types of securities.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more senior securities. For this reason, the value of preferred
securities will usually react more strongly than bonds and other debt securities to actual or perceived changes in the company’s
financial condition or prospects. Preferred securities may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be converted into or exchanged for
a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible
debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed.
Some convertible debt securities may be considered “equity equivalents” because of the feature that makes them convertible
into common stock. Since a convertible security derives a portion of its value from the common stock into which it may be converted, a
convertible security is also subject to the same types of market and issuer risks that
apply to the underlying
common stock. In addition, certain convertible securities are subject to involuntary conversions and may undergo principal write-downs
upon the occurrence of certain triggering events. These convertible securities are subject to an increased risk of loss and are generally
subordinate in rank to other debt obligations of the issuer. Convertible securities may be rated below investment grade and therefore
considered to have more speculative characteristics and greater susceptibility to default or decline in market value than investment grade
securities.
Small-
and Mid-Capitalization Companies Risk. Investing in securities
of small- and mid-capitalization companies involves greater risk than customarily is associated with investing in larger, more established
companies. Stocks of small- and mid-capitalization companies tend to be more vulnerable to changing market conditions, may have little
or no operating history or track record of success, and may have more limited product lines and markets, less experienced management and
fewer financial resources than larger companies. These companies’ securities may be more volatile and less liquid than those of
more established companies. They may be more sensitive to changes in a company’s earnings expectations and may experience more
abrupt and erratic price movements. Smaller companies’ securities often trade in lower volumes and in many instances, are traded
over-the-counter or on a regional securities exchange, where the frequency and volume of trading is substantially less than is typical
for securities of larger companies traded on national securities exchanges. Therefore, the securities of smaller companies may be subject
to wider price fluctuations and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell
them. In addition, investors might seek to trade Fund shares based on their knowledge or understanding of the value of smaller company
securities (this is sometimes referred to as “price arbitrage”), which could interfere with the efficient management of
the Fund. Since small and mid-cap companies typically reinvest a high proportion of their earnings in their business, they may not pay
dividends for some time, particularly if they are newer companies. It may take a substantial period of time to realize a gain on an investment
in a small- or mid-cap company, if any gain is realized at all. The relative sizes of companies may change over time as the securities
market changes, and the Fund is not required to sell the securities of companies whose market capitalizations have grown or decreased
due to market fluctuations.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market
7 Invesco
Real Estate Fund
value due to adverse
economic, regulatory, political or company developments than higher rated or investment grade securities. Prices of high yield debt securities
tend to be very volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable
time or price, particularly in times of negative sentiment toward high yield securities.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Changes in political and economic factors in one country or region could adversely
affect conditions
in another country or region. Investments in foreign securities may also expose the Fund to time-zone arbitrage risk. At times, the Fund
may emphasize investments in a particular country or region and may be subject to greater risks from adverse events that occur in that
country or region. Unless the Fund has hedged its foreign currency exposure, foreign securities risk also involves the risk of negative
foreign currency rate fluctuations, which may cause the value of securities denominated in such foreign currency (or other instruments
through which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates may fluctuate significantly over
short periods of time. Currency hedging strategies, if used, are not always successful. For instance, currency forward contracts, if used
by the Fund, could reduce performance if there are unanticipated changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection, investigation and enforcement
capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted by
audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the
8 Invesco
Real Estate Fund
federal, regional
and local levels in emerging market countries may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market illiquidity, the Fund may not be able to prevent further losses of value in its derivatives
holdings and the liquidity of the Fund and its ability
to
meet redemption requests may be impaired to the extent that a substantial portion of the Fund’s otherwise liquid assets must be
used as margin. Another consequence of illiquidity is that the Fund may be required to hold a derivative instrument to maturity and take
or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a security denominated in a foreign currency or protect against possible losses
from changes in the relative value of the U.S. dollar against a foreign currency. They are subject to the risk that anticipated currency
movements will not be accurately predicted or do not correspond accurately to changes in the value of the fund's holdings, which could
result in losses and additional transaction costs. The use of forward contracts could reduce performance if there are unanticipated changes
in currency prices. A contract to sell a foreign currency would limit any potential gain that might be realized if the value of the currency
increases. A forward foreign currency contract may also result in losses in the event of a default or bankruptcy of the counterparty.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited by the
requirements for taxation of the Fund as a regulated investment company.
Short
Position Risk.
The Fund will incur a loss on a short position if the price of the asset sold short increases from the short sale price. Because the Fund’s
potential loss on a short position arises from increases in the value of the asset sold short, the extent of such loss, like the price
of the asset sold short, is theoretically unlimited. Short sales are speculative transactions and involve greater reliance on the Adviser’s
ability to accurately anticipate the future value of an asset or markets in general. Any gain on a short position is decreased, and any
loss is increased, by the amount of any payment, dividend, interest or other transaction costs that the Fund may be required to pay with
respect to the asset sold short. The counterparty to a short position or market factors, such as a sharp increase in prices, may prevent
the Fund from closing out a short position at a desirable time or price and may reduce or eliminate any gain or result in a loss. In a
rising market, the Fund’s short positions will cause the Fund to underperform the overall market and its peers that do not engage
in shorting. If the Fund holds both long and short positions, both positions may decline simultaneously, in which case the short positions
will not provide any buffer (hedge) from declines in value of the Fund’s long positions. Certain types of short positions involve
leverage, which may exaggerate any losses, potentially more than the actual cost of the investment, and will increase the volatility of
the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
9 Invesco
Real Estate Fund
of its investment
objective may vary across types of investments and issuers eligible for investment, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s portfolio will not
be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused issuers.
The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended. The
Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different
methodology to identify and/or incorporate ESG factors. As investors can differ in their views regarding ESG factors, the Fund may invest
in issuers that do not reflect the views with respect to ESG of any particular investor. Information used by the Fund to evaluate such
factors may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined
characteristic, which could negatively impact the Fund’s ability to accurately assess a company, which could negatively impact
the Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to the Fund’s performance.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s or Sub-Adviser's judgment about markets, interest rates or the
attractiveness, relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio.
The Fund could experience losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s or Sub-Adviser's
investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments
may affect the investments or investment strategies available to the Adviser or Sub-Adviser in connection with managing the Fund, which
may also adversely affect the ability of the Fund to achieve its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco Asset Management Limited (Invesco Asset Management)
serves as the Fund’s investment sub-adviser. Invesco Asset Management, an affiliate of the Adviser, is located at Perpetual Park,
Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom. Invesco Asset Management has been managing assets on behalf
of consumers, institutional clients and institutional professionals through a broad product range, including investment companies with
variable capital, investment trusts, individual savings accounts, pension funds, offshore funds and other specialist mandates since 1969,
the year Invesco Asset Management was incorporated. Invesco Asset Management provides portfolio management services to the Fund.
In
addition, Invesco has entered into one or more Sub-Advisory Agreements
with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers). Invesco may appoint the Sub-Advisers from time to time
to provide discretionary investment management services, investment advice, and/or order execution services to the Fund. The Sub-Advisers
and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund’s SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps
markets. The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies
or this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.73% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
Invesco,
not the Fund, pays sub-advisory fees, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
Investment management
decisions for the Fund are made by the investment management teams at Invesco and Invesco Asset Management. The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
James
Cowen, Portfolio Manager, who has been responsible for the Fund since 2015. He has been a member of Invesco's Real Estate Team since 2001
and has been associated with Invesco Asset Management and/or its affiliates since 2001.
■
Grant
Jackson, CFA, Portfolio Manager, who has been responsible for the Fund since 2018 and has been associated with Invesco and/or its affiliates
since 2005.
■
Darin
Turner, Portfolio Manager, who has been responsible for the Fund since 2009 and has been associated with Invesco and/or its affiliates
since 2005.
■
Ping-Ying
Wang, CFA, Portfolio Manager, who has been responsible for the Fund since 2006 and has been associated with Invesco and/or its affiliates
since 1998.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund’s SAI provides additional information about the portfolio managers’
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 5.50% initial sales charge as listed under the heading “Category I Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of the
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC
10 Invesco
Real Estate Fund
shall not apply
to the purchases of Class C shares where the selling broker-dealer was not paid a commission at the time of purchase. For more information
on CDSCs, see the “Shareholder Account Information—Contingent Deferred Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist of ordinary income, capital gains, or some
combination of both.
Dividends
The Fund generally
declares and pays dividends from net investment income, if any, quarterly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
11 Invesco
Real Estate Fund
The financial
highlights show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund
or any of its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance.
Certain information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
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
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
(loss)
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | |||||||||||||||
|
Year
ended 02/29/24 |
$16.96
|
$0.36
|
$(0.26
) |
$0.10
|
$(0.35
) |
$(0.20
) |
$—
|
$(0.55
) |
$16.51
|
0.71
% |
$531,718
|
1.25
% |
1.26
% |
2.23
% |
62
% |
|
Year
ended 02/28/23 |
21.15
|
0.25
|
(2.67
) |
(2.42
) |
(0.17
) |
(1.60
) |
—
|
(1.77
) |
16.96
|
(11.57
) |
649,570
|
1.24
|
1.24
|
1.30
|
42
|
|
Year
ended 02/28/22 |
18.67
|
0.10
|
3.73
|
3.83
|
(0.21
) |
(1.11
) |
(0.03
) |
(1.35
) |
21.15
|
20.12
|
834,552
|
1.23
|
1.23
|
0.45
|
59
|
|
Year
ended 02/28/21 |
20.72
|
0.17
|
(0.89
) |
(0.72
) |
(0.28
) |
(1.05
) |
—
|
(1.33
) |
18.67
|
(2.59
) |
804,058
|
1.28
|
1.28
|
0.98
|
156
|
|
Year
ended 02/29/20 |
20.94
|
0.30
|
1.44
|
1.74
|
(0.35
) |
(1.61
) |
—
|
(1.96
) |
20.72
|
8.11
|
627,197
|
1.23
|
1.23
|
1.33
|
59
|
|
| |||||||||||||||
|
Class
C | |||||||||||||||
|
Year
ended 02/29/24 |
16.83
|
0.24
|
(0.26
) |
(0.02
) |
(0.22
) |
(0.20
) |
—
|
(0.42
) |
16.39
|
(0.02
) |
19,047
|
2.00
|
2.01
|
1.48
|
62
|
|
Year
ended 02/28/23 |
20.99
|
0.11
|
(2.66
) |
(2.55
) |
(0.01
) |
(1.60
) |
—
|
(1.61
) |
16.83
|
(12.21
) |
24,619
|
1.99
|
1.99
|
0.55
|
42
|
|
Year
ended 02/28/22 |
18.53
|
(0.07
) |
3.71
|
3.64
|
(0.04
) |
(1.11
) |
(0.03
) |
(1.18
) |
20.99
|
19.25
|
37,459
|
1.98
|
1.98
|
(0.30
) |
59
|
|
Year
ended 02/28/21 |
20.56
|
0.04
|
(0.88
) |
(0.84
) |
(0.14
) |
(1.05
) |
—
|
(1.19
) |
18.53
|
(3.33
) |
38,752
|
2.03
|
2.03
|
0.23
|
156
|
|
Year
ended 02/29/20 |
20.80
|
0.13
|
1.42
|
1.55
|
(0.18
) |
(1.61
) |
—
|
(1.79
) |
20.56
|
7.25
|
27,928
|
1.98
|
1.98
|
0.58
|
59
|
|
| |||||||||||||||
|
Class
R | |||||||||||||||
|
Year
ended 02/29/24 |
17.00
|
0.32
|
(0.27
) |
0.05
|
(0.31
) |
(0.20
) |
—
|
(0.51
) |
16.54
|
0.39
|
78,002
|
1.50
|
1.51
|
1.98
|
62
|
|
Year
ended 02/28/23 |
21.18
|
0.21
|
(2.67
) |
(2.46
) |
(0.12
) |
(1.60
) |
—
|
(1.72
) |
17.00
|
(11.73
) |
92,226
|
1.49
|
1.49
|
1.05
|
42
|
|
Year
ended 02/28/22 |
18.70
|
0.04
|
3.73
|
3.77
|
(0.15
) |
(1.11
) |
(0.03
) |
(1.29
) |
21.18
|
19.79
|
114,999
|
1.48
|
1.48
|
0.20
|
59
|
|
Year
ended 02/28/21 |
20.74
|
0.13
|
(0.89
) |
(0.76
) |
(0.23
) |
(1.05
) |
—
|
(1.28
) |
18.70
|
(2.81
) |
103,667
|
1.53
|
1.53
|
0.73
|
156
|
|
Year
ended 02/29/20 |
20.97
|
0.24
|
1.43
|
1.67
|
(0.29
) |
(1.61
) |
—
|
(1.90
) |
20.74
|
7.78
|
60,630
|
1.48
|
1.48
|
1.08
|
59
|
|
| |||||||||||||||
|
Class
Y | |||||||||||||||
|
Year
ended 02/29/24 |
16.95
|
0.40
|
(0.27
) |
0.13
|
(0.39
) |
(0.20
) |
—
|
(0.59
) |
16.49
|
0.91
|
97,481
|
1.00
|
1.01
|
2.48
|
62
|
|
Year
ended 02/28/23 |
21.14
|
0.31
|
(2.68
) |
(2.37
) |
(0.22
) |
(1.60
) |
—
|
(1.82
) |
16.95
|
(11.34
) |
214,673
|
0.98
|
0.98
|
1.56
|
42
|
|
Year
ended 02/28/22 |
18.66
|
0.15
|
3.73
|
3.88
|
(0.26
) |
(1.11
) |
(0.03
) |
(1.40
) |
21.14
|
20.43
|
296,638
|
0.98
|
0.98
|
0.70
|
59
|
|
Year
ended 02/28/21 |
20.71
|
0.22
|
(0.90
) |
(0.68
) |
(0.32
) |
(1.05
) |
—
|
(1.37
) |
18.66
|
(2.33
) |
256,699
|
1.03
|
1.03
|
1.23
|
156
|
|
Year
ended 02/29/20 |
20.94
|
0.36
|
1.42
|
1.78
|
(0.40
) |
(1.61
) |
—
|
(2.01
) |
20.71
|
8.33
|
204,951
|
0.98
|
0.98
|
1.58
|
59
|
|
| |||||||||||||||
|
Investor
Class | |||||||||||||||
|
Year
ended 02/29/24 |
16.90
|
0.37
|
(0.27
) |
0.10
|
(0.35
) |
(0.20
) |
—
|
(0.55
) |
16.45
|
0.72
(d)
|
21,797
|
1.20
(d)
|
1.21
(d)
|
2.28
(d)
|
62
|
|
Year
ended 02/28/23 |
21.08
|
0.25
|
(2.66
) |
(2.41
) |
(0.17
) |
(1.60
) |
—
|
(1.77
) |
16.90
|
(11.53
) |
26,616
|
1.24
|
1.24
|
1.30
|
42
|
|
Year
ended 02/28/22 |
18.61
|
0.11
|
3.71
|
3.82
|
(0.21
) |
(1.11
) |
(0.03
) |
(1.35
) |
21.08
|
20.17
(d)
|
33,026
|
1.16
(d)
|
1.16
(d)
|
0.52
(d)
|
59
|
|
Year
ended 02/28/21 |
20.65
|
0.18
|
(0.89
) |
(0.71
) |
(0.28
) |
(1.05
) |
—
|
(1.33
) |
18.61
|
(2.53
)(d)
|
27,546
|
1.23
(d)
|
1.23
(d)
|
1.03
(d)
|
156
|
|
Year
ended 02/29/20 |
20.89
|
0.30
|
1.42
|
1.72
|
(0.35
) |
(1.61
) |
—
|
(1.96
) |
20.65
|
8.06
(d)
|
37,537
|
1.22
(d)
|
1.22
(d)
|
1.34
(d)
|
59
|
|
| |||||||||||||||
|
Class
R5 | |||||||||||||||
|
Year
ended 02/29/24 |
16.95
|
0.43
|
(0.28
) |
0.15
|
(0.41
) |
(0.20
) |
—
|
(0.61
) |
16.49
|
1.05
|
114,645
|
0.87
|
0.87
|
2.61
|
62
|
|
Year
ended 02/28/23 |
21.14
|
0.33
|
(2.68
) |
(2.35
) |
(0.24
) |
(1.60
) |
—
|
(1.84
) |
16.95
|
(11.22
) |
198,456
|
0.87
|
0.87
|
1.67
|
42
|
|
Year
ended 02/28/22 |
18.66
|
0.18
|
3.73
|
3.91
|
(0.29
) |
(1.11
) |
(0.03
) |
(1.43
) |
21.14
|
20.58
|
283,546
|
0.86
|
0.86
|
0.82
|
59
|
|
Year
ended 02/28/21 |
20.71
|
0.25
|
(0.91
) |
(0.66
) |
(0.34
) |
(1.05
) |
—
|
(1.39
) |
18.66
|
(2.22
) |
247,114
|
0.87
|
0.87
|
1.39
|
156
|
|
Year
ended 02/29/20 |
20.94
|
0.38
|
1.43
|
1.81
|
(0.43
) |
(1.61
) |
—
|
(2.04
) |
20.71
|
8.47
|
268,267
|
0.87
|
0.87
|
1.69
|
59
|
|
| |||||||||||||||
|
Class
R6 | |||||||||||||||
|
Year
ended 02/29/24 |
16.95
|
0.44
|
(0.28
) |
0.16
|
(0.42
) |
(0.20
) |
—
|
(0.62
) |
16.49
|
1.12
|
192,398
|
0.80
|
0.80
|
2.68
|
62
|
|
Year
ended 02/28/23 |
21.14
|
0.34
|
(2.68
) |
(2.34
) |
(0.25
) |
(1.60
) |
—
|
(1.85
) |
16.95
|
(11.16
) |
259,893
|
0.81
|
0.81
|
1.73
|
42
|
|
Year
ended 02/28/22 |
18.66
|
0.20
|
3.72
|
3.92
|
(0.30
) |
(1.11
) |
(0.03
) |
(1.44
) |
21.14
|
20.67
|
341,500
|
0.78
|
0.78
|
0.90
|
59
|
|
Year
ended 02/28/21 |
20.71
|
0.26
|
(0.90
) |
(0.64
) |
(0.36
) |
(1.05
) |
—
|
(1.41
) |
18.66
|
(2.13
) |
318,936
|
0.79
|
0.79
|
1.47
|
156
|
|
Year
ended 02/29/20 |
20.93
|
0.40
|
1.44
|
1.84
|
(0.45
) |
(1.61
) |
—
|
(2.06
) |
20.71
|
8.60
|
202,467
|
0.79
|
0.79
|
1.77
|
59
|
|
| |||||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns
based
upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges
and is not annualized for periods less than one
year,
if applicable. |
|
(c)
|
Portfolio
turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended February
28, 2021, the portfolio turnover calculation excludes
the
value of securities purchased of $630,639,314 and sold of $40,029,958 in the effort to realign the Fund’s portfolio holdings after
the reorganization of Invesco Oppenheimer Real Estate Fund
into
the Fund. |
|
(d)
|
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 0.20%, 0.18%, 0.20% and 0.24% for the years
ended
February 29, 2024, February 28, 2022, February 28, 2021 and February 29, 2020, respectively. |
12 Invesco
Real Estate Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
(1.96)%
|
1.72%
|
5.53%
|
9.49%
|
13.60%
|
17.86%
|
22.28%
|
26.87%
|
31.63%
|
36.57%
|
|
End
of Year Balance |
$9,804.38
|
$10,172.04
|
$10,553.49
|
$10,949.25
|
$11,359.85
|
$11,785.84
|
$12,227.81
|
$12,686.35
|
$13,162.09
|
$13,655.67
|
|
Estimated
Annual Expenses |
$670.34
|
$124.85
|
$129.53
|
$134.39
|
$139.43
|
$144.66
|
$150.09
|
$155.71
|
$161.55
|
$167.61
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
1.25%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.75%
|
7.64%
|
11.68%
|
15.87%
|
20.22%
|
24.73%
|
29.41%
|
34.26%
|
39.29%
|
44.51%
|
|
End
of Year Balance |
$10,375.00
|
$10,764.06
|
$11,167.71
|
$11,586.50
|
$12,020.99
|
$12,471.78
|
$12,939.47
|
$13,424.70
|
$13,928.13
|
$14,450.43
|
|
Estimated
Annual Expenses |
$127.34
|
$132.12
|
$137.07
|
$142.21
|
$147.55
|
$153.08
|
$158.82
|
$164.78
|
$170.96
|
$177.37
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
2.00%
|
2.00%
|
2.00%
|
2.00%
|
2.00%
|
2.00%
|
2.00%
|
2.00%
|
1.25%
|
1.25%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.00%
|
6.09%
|
9.27%
|
12.55%
|
15.93%
|
19.41%
|
22.99%
|
26.68%
|
31.43%
|
36.36%
|
|
End
of Year Balance |
$10,300.00
|
$10,609.00
|
$10,927.27
|
$11,255.09
|
$11,592.74
|
$11,940.52
|
$12,298.74
|
$12,667.70
|
$13,142.74
|
$13,635.59
|
|
Estimated
Annual Expenses |
$203.00
|
$209.09
|
$215.36
|
$221.82
|
$228.48
|
$235.33
|
$242.39
|
$249.66
|
$161.32
|
$167.36
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
1.50%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.50%
|
7.12%
|
10.87%
|
14.75%
|
18.77%
|
22.93%
|
27.23%
|
31.68%
|
36.29%
|
41.06%
|
|
End
of Year Balance |
$10,350.00
|
$10,712.25
|
$11,087.18
|
$11,475.23
|
$11,876.86
|
$12,292.55
|
$12,722.79
|
$13,168.09
|
$13,628.97
|
$14,105.98
|
|
Estimated
Annual Expenses |
$152.63
|
$157.97
|
$163.50
|
$169.22
|
$175.14
|
$181.27
|
$187.62
|
$194.18
|
$200.98
|
$208.01
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.00%
|
8.16%
|
12.49%
|
16.99%
|
21.67%
|
26.54%
|
31.60%
|
36.86%
|
42.33%
|
48.02%
|
|
End
of Year Balance |
$10,400.00
|
$10,816.00
|
$11,248.64
|
$11,698.59
|
$12,166.53
|
$12,653.19
|
$13,159.32
|
$13,685.69
|
$14,233.12
|
$14,802.44
|
|
Estimated
Annual Expenses |
$102.00
|
$106.08
|
$110.32
|
$114.74
|
$119.33
|
$124.10
|
$129.06
|
$134.23
|
$139.59
|
$145.18
|
|
| ||||||||||
|
Investor
Class |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
1.20%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
3.80%
|
7.74%
|
11.83%
|
16.08%
|
20.49%
|
25.07%
|
29.82%
|
34.75%
|
39.87%
|
45.19%
|
|
End
of Year Balance |
$10,380.00
|
$10,774.44
|
$11,183.87
|
$11,608.86
|
$12,050.00
|
$12,507.90
|
$12,983.20
|
$13,476.56
|
$13,988.67
|
$14,520.24
|
|
Estimated
Annual Expenses |
$122.28
|
$126.93
|
$131.75
|
$136.76
|
$141.95
|
$147.35
|
$152.95
|
$158.76
|
$164.79
|
$171.05
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.13%
|
8.43%
|
12.91%
|
17.57%
|
22.43%
|
27.49%
|
32.76%
|
38.24%
|
43.95%
|
49.90%
|
|
End
of Year Balance |
$10,413.00
|
$10,843.06
|
$11,290.88
|
$11,757.19
|
$12,242.76
|
$12,748.39
|
$13,274.90
|
$13,823.15
|
$14,394.05
|
$14,988.52
|
|
Estimated
Annual Expenses |
$88.80
|
$92.46
|
$96.28
|
$100.26
|
$104.40
|
$108.71
|
$113.20
|
$117.88
|
$122.74
|
$127.81
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
0.80%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.20%
|
8.58%
|
13.14%
|
17.89%
|
22.84%
|
28.00%
|
33.38%
|
38.98%
|
44.82%
|
50.90%
|
|
End
of Year Balance |
$10,420.00
|
$10,857.64
|
$11,313.66
|
$11,788.83
|
$12,283.96
|
$12,799.89
|
$13,337.49
|
$13,897.66
|
$14,481.36
|
$15,089.58
|
|
Estimated
Annual Expenses |
$81.68
|
$85.11
|
$88.69
|
$92.41
|
$96.29
|
$100.34
|
$104.55
|
$108.94
|
$113.52
|
$118.28
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
13 Invesco
Real Estate Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Real Estate Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
REA-PRO-1
|
Prospectus
June 28, 2024
Class:
A (LMTAX), A2 (SHTIX), Y (LMTYX), R5 (ALMIX), R6 (SDPSX)
Invesco Short
Duration Inflation Protected Fund
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Class
A shares were formerly known as Class A3 shares and Class A2 shares were formerly known as Class A shares. Class A2 shares are closed
to new investors.
Table of Contents
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1
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4
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7
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7
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7
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8
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8
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8
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9
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10
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A-1
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco Short
Duration Inflation Protected Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is to provide protection from the negative effects of unanticipated inflation.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
|
Class:
|
A
|
A2
|
Y
|
R5
|
R6
|
|
Management
Fees |
0.20
% |
0.20
% |
0.20
% |
0.20
% |
0.20
% |
|
| |||||
|
Distribution
and/or Service (12b-1) Fees |
0.25
|
0.15
|
None
|
None
|
None
|
|
| |||||
|
Other
Expenses |
0.23
|
0.23
|
0.23
|
0.16
|
0.14
|
|
| |||||
|
Total
Annual Fund Operating Expenses |
0.68
|
0.58
|
0.43
|
0.36
|
0.34
|
|
| |||||
|
Fee
Waiver and/or Expense Reimbursement2
|
0.13
|
0.13
|
0.13
|
0.06
|
0.04
|
|
| |||||
|
Total
Annual Fund Operating Expenses After Fee Waiver
and/or
Expense Reimbursement |
0.55
|
0.45
|
0.30
|
0.30
|
0.30
|
|
| |||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
|
2 |
Invesco Advisers,
Inc. (Invesco or the Adviser) has contractually agreed 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 in the SAI) of Class
A, Class A2, Class Y, Class R5 and Class R6 shares to 0.55%, 0.45%, 0.30%, 0.30% and 0.30%, respectively, of the Fund's average daily
net assets (the “expense limits”). Unless Invesco continues the fee waiver agreement, it will terminate on June
30, 2025. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without
approval of the Board of Trustees.
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain equal to the Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement in the first year and the Total Annual Fund Operating Expenses thereafter.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 36%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests
under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in the component securities of
the ICE BofA 1-5 Year US Inflation-Linked Treasury Index (the Index) and in derivatives and other instruments that have economic characteristics
similar to such securities. The Index is comprised of U.S. Treasury Inflation Protected Securities (TIPS) with at least $1 billion in
outstanding face value, at
least 18 months to maturity at point of issuance and a remaining term to final maturity of at least 1 year and less than 5 years at the
time of index rebalancing. The Fund can also invest the remainder of its assets in fixed income securities that are not included in the
Index, but which the Fund’s investment adviser, Invesco Advisers, Inc. (Invesco or the Adviser), believes will help the Fund track
the Index. The Fund generally expects that its duration, yield and maturity will be substantially similar to those of the Index.
The
Fund normally seeks to maintain an average portfolio effective duration
that is within +/- 1 year of the duration of the Index, which was 2.48 years as of February 29, 2024.
TIPS
are publicly issued, U.S dollar denominated, U.S. government debt securities
issued by the U.S. Treasury that have principal and interest payments linked to official inflation (as measured by the Consumer Price
Index or CPI) and their payments are supported by the full faith and credit of the United States. As of February 29, 2024, there were
21 TIPS in the Index.
The
Fund can invest in derivative instruments, such as swap contracts, options
and futures contracts, to seek exposure to certain securities or groups of securities included in the Index.
The
Fund may purchase and sell securities on a when-issued, delayed delivery
or forward commitment basis, which means that the Fund buys or sells a security with payment and delivery taking place in the future.
The
portfolio manager primarily uses a replication strategy to track, as closely
as possible, the securities in the Index and their respective weightings, by investing directly in securities that make up the Index.
The portfolio manager adjusts the composition of the Fund to reflect changes in the composition of the Index generally at each rebalance
of the Index. The Fund may also use a representative sampling methodology to track the performance of the Index. Representative sampling
means that the portfolio manager may use a quantitative analysis to select either a subset of the securities that make up the Index or
a combination of some or all of the securities that make up the Index and other securities that are not part of the Index. In either case,
the representative sampling of securities selected by the portfolio manager should have, in the aggregate, investment characteristics
that are similar to the Index in terms of key risk factors, performance attributes and other characteristics, such as market
1 Invesco Short
Duration Inflation Protected Fund
capitalization,
duration, maturity, credit quality, yield and coupon, as applicable. It is expected that the portfolio manager will use this representative
sampling methodology where it is difficult to acquire the necessary securities that make up the Index, where the asset levels of the Fund
do not allow for the holding of all the securities that make up the Index or where it is otherwise beneficial to the Fund to do so.
Unlike
many investment companies, the Fund does not utilize an investment
strategy that attempts to outperform the Index. Rather, the Fund utilizes an indexing approach, which may eliminate the chance that the
Fund will substantially outperform the Index, but it may also reduce some of the risk of active management. Indexing generally achieves
lower costs by keeping portfolio turnover low in comparison to actively managed investment companies.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
Index
Risk.
Unlike many investment companies, the Fund does not utilize an investing strategy that seeks returns in excess of its Index. Therefore,
the Fund would not necessarily buy or sell a security unless that security is added to or removed from, respectively, the Index, even
if that security generally is underperforming. Additionally, the Fund generally rebalances its portfolio in accordance with the Index,
and, therefore, any changes to the Index’s rebalance schedule will typically result in corresponding changes to the Fund’s
rebalance schedule.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Inflation-Indexed
Securities Risk.
The values of inflation-indexed securities generally fluctuate in response to changes in real interest rates. Such changes may be difficult
to predict and it is possible that an
investment
in inflation-indexed securities will have an effect different from that anticipated. Because of the inflation-adjustment feature, these
securities typically have lower yields than traditional fixed-rate securities with similar maturities. Normally inflation-indexed securities
will decline in price when real interest rates rise which could cause losses for the Fund. As a result, the Fund’s income from
its investments in these securities is likely to fluctuate considerably more than the income distributions of its investments in more
traditional fixed-income securities.
Inflation-Indexed
Securities Tax Risk.
Any increase in the principal amount of an inflation-indexed security may be included for tax purposes in the Fund’s gross income,
even though no cash attributable to such gross income has been received by the Fund. In such event, the Fund may be required to make annual
distributions to shareholders that exceed the cash it has otherwise received. In order to pay such distributions, the Fund may be required
to raise cash by selling portfolio investments. The sale of such investments could result in capital gains to the Fund and additional
capital gain distributions to shareholders. In addition, adjustments during the taxable year for deflation to an inflation-indexed bond
held by the Fund may cause amounts previously distributed to shareholders in the taxable year as income to be characterized as a return
of capital.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to
2 Invesco Short
Duration Inflation Protected Fund
changing
government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may
not always be successful. For example, derivatives used for hedging or to gain or limit exposure to a particular market segment may not
provide the expected benefits, particularly during adverse market conditions.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions subject the Fund to market risk because the value or yield of a security at delivery may
be more or less than the purchase price or yield generally available when delivery occurs, and counterparty risk because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction. These transactions also have a leveraging effect on the Fund
because the Fund commits to purchase securities that it does not have to pay for until a later date, which increases the Fund’s
overall investment exposure and, as a result, its volatility.
Non-Correlation
Risk.
The return of the Fund’s assets managed pursuant to an indexing approach (Indexed Assets) may not match the return of the index
the Fund seeks to track with respect to the Indexed Assets (Underlying Index) for a number of reasons. For example, the Fund incurs operating
expenses not applicable to the Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing securities
holdings to reflect changes in the Underlying Index. In addition, the performance of the Indexed Assets and the Underlying Index may vary
due to asset valuation differences and differences between the Indexed Assets and the Underlying Index resulting from legal restrictions,
costs or liquidity constraints.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding a smaller number of securities than are in the
Index and in the Fund holding securities not included in the Index. As a result, an adverse development respecting an issuer of securities
held by the Fund could result in a greater decline in the Fund’s NAV than would be the case if all of the securities in the Index
were held. The Fund’s use of a representative sampling approach may also include the risk that it may not track the return of the
Index as well as it would have if the Fund held all of the securities in the Index.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and a broad-based securities market benchmark (in that order). The
Fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
The bar chart does
not reflect sales loads. If it did, the annual total returns shown would be lower.
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
A2 |
|
|
|
|
|
Return
Before Taxes |
12/15/1987
|
3.05
% |
2.62
% |
1.58
% |
|
Return
After Taxes on Distributions |
|
1.83
|
1.30
|
0.66
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
1.79
|
1.45
|
0.81
|
|
| ||||
|
Class
A |
10/31/2002
|
1.38
|
2.20
|
1.34
|
|
| ||||
|
Class
Y |
10/3/2008
|
4.27
|
2.98
|
1.81
|
|
| ||||
|
Class
R5 |
7/13/1987
|
4.16
|
2.97
|
1.82
|
|
| ||||
|
Class
R6 |
12/31/2015
|
4.16
|
2.98
|
1.81
1
|
|
| ||||
|
ICE
BofA 1-5 Year US Inflation-Linked Treasury
Index
(reflects
no deduction for fees, expenses or
taxes)2
|
|
4.35
|
3.26
|
1.93
|
|
| ||||
|
Bloomberg U.S. Aggregate Bond Index (reflects no
deduction
for fees, expenses or taxes)2
|
|
5.53
|
1.10
|
1.81
|
|
| ||||
1
Performance shown prior to the
inception date is that of the Fund's Class A2 shares at net asset value and includes the 12b-1 fees applicable to that class. Although
invested in the same portfolio of securities, Class R6 shares' returns of the Fund will be different from Class A2 shares' returns of
the Fund as they have different expenses.
2
Effective June 28, 2024, the Fund
changed its broad-based securities market benchmark from the ICE BofA 1-5 Year US Inflation-Linked Treasury Index to the Bloomberg U.S.
Aggregate Bond Index to reflect that the Bloomberg U.S. Aggregate Bond Index can be considered more broadly representative of the overall
applicable securities market.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant
to investors who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual
retirement accounts. After-tax
returns are shown for Class A2 shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Purchase
and Sale of Fund Shares
You may purchase,
redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246. Shares of the
Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through our website at
www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
New
investments in Class A2 shares are not permitted. The minimum investments
for Class A and Y shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a
3 Invesco Short
Duration Inflation Protected Fund
retirement platform
that administers at least $2.5 billion in retirement plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet
a minimum initial investment of at least $1 million in each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement, such as
a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over another investment.
Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is to provide protection from the negative effects of unanticipated inflation. The Fund’s investment objective
may be changed by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests under normal circumstances at least 80% of its net assets
(plus any borrowings for investment purposes) in the component securities of the ICE BofA 1-5 Year US Inflation-Linked Treasury Index
(the Index) and in derivatives and other instruments that have economic characteristics similar to such securities. The Index is comprised
of U.S. TIPS with at least $1 billion in outstanding face value,
at least 18 months to maturity at point of issuance and a
remaining term to final maturity of at least 1 year and less than 5 years at the time of index rebalancing. The Fund can also invest the
remainder of its assets in fixed income securities that are not included in the Index, but which the Fund’s investment adviser,
Invesco, believes will help the Fund track the Index. The Fund generally expects that its duration, yield and maturity will be substantially
similar to those of the Index.
The
Fund normally seeks to maintain an average portfolio effective duration
that is within +/- 1 year of the duration of the Index, which was 2.48 years as of February 29, 2024. Duration is a measure of volatility
expressed in years and represents the anticipated percent change in a bond’s price at a single point in time for a 1% change in
yield. As duration increases, volatility increases as applicable interest rates change. For
example, the value
of a fixed income security with a duration of five years would be expected to decrease by 5% for every 1% increase in interest rates.
TIPS
are publicly issued, U.S. dollar denominated, U.S. government debt securities
issued by the U.S. Treasury that have principal and interest payments linked to official inflation (as measured by the Consumer Price
Index or CPI) and their payments are supported by the full faith and credit of the United States. As of February 29, 2024, there were
21 TIPS in the Index.
The
Fund can invest in derivative instruments, such as swap contracts, options
and futures contracts, to seek exposure to certain securities or groups of securities included in the Index.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of a futures contract tends
to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both the purchaser
and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are
settled by purchasing an offsetting contract, physically delivering the underlying asset on the settlement date or paying a cash settlement
amount on the settlement date.
The
Fund may purchase and sell securities on a when-issued, delayed delivery
or forward commitment basis, which means that the Fund buys or sells a security with payment and delivery taking place in the future.
The
portfolio manager primarily uses a replication strategy to track, as closely
as possible, the securities in the Index and their respective weightings, by investing directly in securities that make up the Index.
The portfolio manager adjusts the composition of the Fund to reflect changes in the composition of the Index generally at each rebalance
of the Index. The Fund may also use a representative sampling methodology to track the performance of the Index. Representative sampling
means that the portfolio manager may use a quantitative analysis to select either a subset of the securities that make up the Index or
a combination of some or all of the securities that make up the Index and other securities that are not part of the Index. In either case,
the representative sampling of securities selected by the portfolio manager should have, in the aggregate, investment characteristics
that are similar to the Index in terms of key risk factors, performance attributes and other characteristics, such as market capitalization,
duration, maturity, credit quality, yield and coupon, as applicable. It is expected that the portfolio manager will use this representative
sampling methodology where it is difficult to acquire the necessary securities that make up the Index, where the asset levels of the Fund
do not allow for the holding of all the securities that make up the Index or where it is otherwise beneficial to the Fund to do so.
4 Invesco Short
Duration Inflation Protected Fund
There
also may be instances in which the portfolio manager may choose
to (i) overweight or underweight a security in the Index, (ii) purchase securities not contained in the Index that the portfolio manager
believes are appropriate to substitute for certain securities in the Index, or (iii) utilize various combinations of other available investment
techniques in seeking to track the Index.
The
Fund may sell securities included in the Index in anticipation of their removal
from the Index, or purchase securities not included in the Index in anticipation of their addition to the Index.
Unlike
many investment companies, the Fund does not utilize an investment
strategy that attempts to outperform the Index. Rather, the Fund utilizes an indexing approach, which may eliminate the chance that the
Fund will substantially outperform the Index, but it may also reduce some of the risk of active management. Indexing generally achieves
lower costs by keeping portfolio turnover low in comparison to actively managed investment companies.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio manager may temporarily use a different investment strategy for defensive purposes. If the Fund’s portfolio
manager does so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Fund and Its Investments and
Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Because the Fund
is passively managed, such circumstances may also impact the Fund to a greater degree than mutual funds with investment advisers that
actively manage their portfolio assets to take advantage of or defend against market events. During a general downturn in the financial
markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific investments held
by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain
sectors.
The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Index
Risk.
Unlike many investment companies that are “actively managed,” the Fund is a “passive” investor and therefore
does not utilize an investing strategy that seeks returns in excess of the Index. Therefore, the Fund would not necessarily buy or sell
a security unless that security is added to or removed from, respectively, the Index, even if that security generally is underperforming.
If a specific security is removed from the Index, the Fund may be forced to sell such security at an inopportune time or for a price lower
than the security’s current market value. The Index may not contain the appropriate mix of securities for any particular economic
cycle. Additionally, the Fund generally rebalances its portfolio in accordance with the Index, and, therefore, any changes to the Index’s
rebalance schedule will typically result in corresponding changes to the Fund’s rebalance schedule. Further, unlike with an actively
managed fund, the Adviser does not use techniques or defensive strategies designed to lessen the impact of periods of market volatility
or market decline. This means that, based on certain market and economic conditions, the Fund’s performance could be lower than
other types of mutual funds with investment advisers that actively manage their portfolio assets to take advantage of or defend against
market events.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Inflation-Indexed
Securities Risk.
Inflation-indexed securities typically provide principal and interest payments that are adjusted over time to reflect a rise (inflation)
or a drop (deflation) in the general price level for goods and services. Because of the inflation-adjustment feature, these securities
typically have lower yields than traditional fixed-rate securities with similar maturities. The values of inflation-indexed securities
generally fluctuate in response to changes in real interest rates. Such changes may be difficult to predict and it is possible that an
investment in inflation-indexed securities will have an effect different from that anticipated. Real interest rates are tied to the relationship
between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than inflation, real interest
rates might rise, leading to a decrease in value of inflation-indexed securities, which could cause losses for the Fund. Conversely, if
inflation rises at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed
securities. The Fund’s income from its investments in inflation-indexed securities is likely to fluctuate considerably more than
the income distributions of its investments in more traditional fixed-income securities.
5 Invesco Short
Duration Inflation Protected Fund
Inflation-Indexed
Securities Tax Risk.
Any increase in the principal amount of an inflation-indexed security may be included for tax purposes in the Fund’s gross income,
even though no cash attributable to such gross income has been received by the Fund. In such event, the Fund may be required to make annual
distributions to shareholders that exceed the cash it has otherwise received. In order to pay such distributions, the Fund may be required
to raise cash by selling portfolio investments. The sale of such investments could result in capital gains to the Fund and additional
capital gain distributions to shareholders. In addition, adjustments during the taxable year for deflation to an inflation-indexed bond
held by the Fund may cause amounts previously distributed to shareholders in the taxable year as income to be characterized as a return
of capital.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the
relevant
exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for payment on derivative instruments
for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market illiquidity, the Fund may not be able to prevent further losses of value in its derivatives
holdings and the liquidity of the Fund and its ability to meet redemption requests may be impaired to the extent that a substantial portion
of the Fund’s otherwise liquid assets must be used as margin. Another consequence of illiquidity is that the Fund may be required
to hold a derivative instrument to maturity and take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted
6 Invesco Short
Duration Inflation Protected Fund
for
clearing to a central clearing house counterparty, and the Fund faces the central clearing house counterparty by means of an account with
a futures commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no hedging benefits at all. The Fund’s use of derivatives may be limited by the
requirements for taxation of the Fund as a regulated investment company.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or
less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to
counterparty risk because it relies on the buyer or seller, as the case may be, to consummate the transaction, and failure by the counterparty
to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous.
These transactions have a leveraging effect on the Fund because the Fund commits to purchase securities that it does not have to pay for
until a later date. These investments therefore increase the Fund’s overall investment exposure and, as a result, its volatility.
Typically, no income accrues on securities the Fund has committed to purchase prior to the time delivery of the securities is made.
Non-Correlation
Risk.
The return of the Fund’s assets managed pursuant to an indexing approach (Indexed Assets) may not match the return of the index
the Fund seeks to track with respect to the Indexed Assets (Underlying Index) for a number of reasons. For example, the Fund incurs operating
expenses not applicable to the Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing securities
holdings to reflect changes in the Underlying Index. In addition, the performance of the Indexed Assets and the Underlying Index may vary
due to asset valuation differences and differences between the Indexed Assets and the Underlying Index resulting from legal restrictions,
costs or liquidity constraints.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding a smaller number of securities than are in the
Index and in the Fund holding securities not included in the Index. As a result, an adverse development respecting an issuer of securities
held by the Fund could result in a greater decline in the Fund’s NAV than would be the case if all of the securities in the Index
were held. The Fund’s use of a representative sampling approach may also include the risk that it may not track the return of the
Index as well as it would have if the Fund held all of the securities in the Index.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund’s SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps
markets. The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies
or this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.12% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Manager
The following individual
is primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Robert
Young, CFA, Portfolio Manager, who has been responsible for the Fund since 2015 and has been associated with Invesco and/or its affiliates
since 2001.
More
information on the portfolio manager may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund’s SAI provides additional information about the portfolio manager’s
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class A
shares of the Fund are subject to the maximum 2.50% initial sales charge as listed under the heading “Category IV Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section
of this prospectus. Purchases of
7 Invesco Short
Duration Inflation Protected Fund
Class A2 shares
of the Fund are subject to the maximum 1.00% initial sales charge as listed under the heading “Category III Initial Sales Charges”
in the “Shareholder Account Information—Initial Sales Charges (Class A Shares only)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares and pays dividends from net investment income, if any, quarterly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
During a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments,
the effect of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience
a current year loss, it may nonetheless distribute prior year capital gains.
Closure
of Class A2 shares
The Fund discontinued
public sales of its Class A2 shares to new investors at the close of business on October 30, 2002.
Existing
shareholders of the Fund may continue to invest in Class A2 shares
of the Fund if they were invested in the Class A2 shares of the Fund at the close of business on October 30, 2002 and remain invested
in Class A2 shares of the Fund after that date.
Disclaimers
ICE
Data Indices, LLC (“ICE Data”), is used with permission. “ICE®”
is a service/trade mark of ICE Data Indices, LLC or its affiliates. “BofA®”
is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates (“BofA”)
and may not be used without BofA’s prior written approval. These trademarks have been licensed, along with the ICE BofA 1-5 Year
US Inflation-Linked Treasury Index (“Index”) for use by the Adviser in connection with the Invesco Short Duration Inflation
Protected Fund (the “Fund”). Neither the Adviser nor the Fund, as applicable, is sponsored, endorsed, sold or promoted by
ICE Data Indices, LLC, its affiliates or its third party suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers
make no representations or warranties regarding the advisability of investing in securities generally, in the Fund particularly or the
ability of the Index to track general market performance. ICE Data’s only relationship to the Adviser is the licensing of certain
trademarks and trade names and the Index or components thereof. The Index is determined, composed and calculated by ICE Data without regard
to the Adviser or the Fund or its holders. ICE Data has no obligation to take the needs of the Adviser or the holders of the Fund into
consideration in determining, composing or calculating the Index. ICE Data is not responsible for and has not participated in the determination
of the timing of, prices of, or quantities of the Fund to be issued or in the determination or calculation of the equation by which the
Fund is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by
ICE Data is general in nature and not tailored to the needs of the Adviser or any other person, entity or group of persons. ICE Data has
no obligation or liability in connection with the administration, marketing, or trading of the Fund. ICE Data is not an investment advisor.
Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered
to be investment advice.
ICE
DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND
REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY
WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED
THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE
ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS
AND YOUR USE IS AT YOUR OWN RISK.
The
Adviser makes no warranty, express or implied, as to results to be obtained
by the Fund, owners of shares of the Fund, or any other person or entity from the use of the Index or any data included therein. The Adviser
makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or
use with respect to the Index or any data included therein. Without limiting any of the foregoing, in no event shall the Adviser have
any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating
to the use of the Index, even if notified of the possibility of such damages.
8 Invesco Short
Duration Inflation Protected Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(both
realized
and
unrealized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | ||||||||||||||
|
Year
ended 02/29/24 |
$9.67
|
$0.31
|
$0.05
|
$0.36
|
$(0.27
) |
$(0.02
) |
$(0.29
) |
$9.74
|
3.79
% |
$123,910
|
0.55
% |
0.68
% |
3.22
% |
36
% |
|
Year
ended 02/28/23 |
10.87
|
0.50
|
(0.99
) |
(0.49
) |
(0.64
) |
(0.07
) |
(0.71
) |
9.67
|
(4.66
) |
185,876
|
0.55
|
0.64
|
4.95
|
52
|
|
Year
ended 02/28/22 |
10.82
|
0.57
|
(0.07
) |
0.50
|
(0.45
) |
—
|
(0.45
) |
10.87
|
4.65
|
126,718
|
0.55
|
0.61
|
5.23
|
53
|
|
Year
ended 02/28/21 |
10.43
|
0.09
|
0.40
|
0.49
|
(0.09
) |
(0.01
) |
(0.10
) |
10.82
|
4.76
|
76,073
|
0.55
|
0.67
|
0.87
|
49
|
|
Year
ended 02/29/20 |
10.16
|
0.22
|
0.24
|
0.46
|
(0.16
) |
(0.03
) |
(0.19
) |
10.43
|
4.61
|
45,383
|
0.55
|
0.66
|
2.17
|
45
|
|
| ||||||||||||||
|
Class
A2 | ||||||||||||||
|
Year
ended 02/29/24 |
9.68
|
0.32
|
0.05
|
0.37
|
(0.28
) |
(0.02
) |
(0.30
) |
9.75
|
3.90
|
11,023
|
0.45
|
0.58
|
3.32
|
36
|
|
Year
ended 02/28/23 |
10.88
|
0.51
|
(0.99
) |
(0.48
) |
(0.65
) |
(0.07
) |
(0.72
) |
9.68
|
(4.56
) |
11,739
|
0.45
|
0.54
|
5.05
|
52
|
|
Year
ended 02/28/22 |
10.84
|
0.59
|
(0.09
) |
0.50
|
(0.46
) |
—
|
(0.46
) |
10.88
|
4.66
|
13,778
|
0.45
|
0.51
|
5.33
|
53
|
|
Year
ended 02/28/21 |
10.45
|
0.10
|
0.40
|
0.50
|
(0.09
) |
(0.02
) |
(0.11
) |
10.84
|
4.86
|
15,618
|
0.45
|
0.57
|
0.97
|
49
|
|
Year
ended 02/29/20 |
10.17
|
0.23
|
0.25
|
0.48
|
(0.17
) |
(0.03
) |
(0.20
) |
10.45
|
4.81
|
16,641
|
0.45
|
0.56
|
2.27
|
45
|
|
| ||||||||||||||
|
Class
Y | ||||||||||||||
|
Year
ended 02/29/24 |
9.68
|
0.34
|
0.05
|
0.39
|
(0.30
) |
(0.02
) |
(0.32
) |
9.75
|
4.05
|
39,865
|
0.30
|
0.43
|
3.47
|
36
|
|
Year
ended 02/28/23 |
10.89
|
0.53
|
(1.01
) |
(0.48
) |
(0.66
) |
(0.07
) |
(0.73
) |
9.68
|
(4.49
) |
87,930
|
0.30
|
0.39
|
5.20
|
52
|
|
Year
ended 02/28/22 |
10.84
|
0.60
|
(0.07
) |
0.53
|
(0.48
) |
—
|
(0.48
) |
10.89
|
4.91
|
100,465
|
0.30
|
0.36
|
5.48
|
53
|
|
Year
ended 02/28/21 |
10.45
|
0.12
|
0.40
|
0.52
|
(0.11
) |
(0.02
) |
(0.13
) |
10.84
|
5.02
|
33,512
|
0.30
|
0.42
|
1.12
|
49
|
|
Year
ended 02/29/20 |
10.18
|
0.25
|
0.24
|
0.49
|
(0.19
) |
(0.03
) |
(0.22
) |
10.45
|
4.86
|
17,906
|
0.30
|
0.41
|
2.42
|
45
|
|
| ||||||||||||||
|
Class
R5 | ||||||||||||||
|
Year
ended 02/29/24 |
9.68
|
0.34
|
0.05
|
0.39
|
(0.30
) |
(0.02
) |
(0.32
) |
9.75
|
4.05
|
20,557
|
0.30
|
0.36
|
3.47
|
36
|
|
Year
ended 02/28/23 |
10.88
|
0.53
|
(1.00
) |
(0.47
) |
(0.66
) |
(0.07
) |
(0.73
) |
9.68
|
(4.41
) |
33,939
|
0.30
|
0.30
|
5.20
|
52
|
|
Year
ended 02/28/22 |
10.83
|
0.60
|
(0.07
) |
0.53
|
(0.48
) |
—
|
(0.48
) |
10.88
|
4.91
|
28,283
|
0.30
|
0.34
|
5.48
|
53
|
|
Year
ended 02/28/21 |
10.44
|
0.12
|
0.40
|
0.52
|
(0.11
) |
(0.02
) |
(0.13
) |
10.83
|
5.02
|
4,640
|
0.30
|
0.34
|
1.12
|
49
|
|
Year
ended 02/29/20 |
10.18
|
0.25
|
0.23
|
0.48
|
(0.19
) |
(0.03
) |
(0.22
) |
10.44
|
4.81
|
2,340
|
0.29
|
0.29
|
2.43
|
45
|
|
| ||||||||||||||
|
Class
R6 | ||||||||||||||
|
Year
ended 02/29/24 |
9.68
|
0.34
|
0.05
|
0.39
|
(0.30
) |
(0.02
) |
(0.32
) |
9.75
|
4.05
|
244,133
|
0.30
|
0.34
|
3.47
|
36
|
|
Year
ended 02/28/23 |
10.88
|
0.53
|
(1.00
) |
(0.47
) |
(0.66
) |
(0.07
) |
(0.73
) |
9.68
|
(4.41
) |
295,467
|
0.30
|
0.30
|
5.20
|
52
|
|
Year
ended 02/28/22 |
10.84
|
0.61
|
(0.09
) |
0.52
|
(0.48
) |
—
|
(0.48
) |
10.88
|
4.84
|
322,282
|
0.28
|
0.28
|
5.50
|
53
|
|
Year
ended 02/28/21 |
10.45
|
0.12
|
0.40
|
0.52
|
(0.11
) |
(0.02
) |
(0.13
) |
10.84
|
5.05
|
391,051
|
0.27
|
0.27
|
1.15
|
49
|
|
Year
ended 02/29/20 |
10.18
|
0.25
|
0.24
|
0.49
|
(0.19
) |
(0.03
) |
(0.22
) |
10.45
|
4.92
|
467,061
|
0.26
|
0.26
|
2.46
|
45
|
|
| ||||||||||||||
|
(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. |
9 Invesco Short
Duration Inflation Protected Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.55%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
1.84%
|
6.24%
|
10.83%
|
15.62%
|
20.61%
|
25.82%
|
31.26%
|
36.93%
|
42.85%
|
49.02%
|
|
End
of Year Balance |
$10,183.88
|
$10,623.82
|
$11,082.77
|
$11,561.55
|
$12,061.01
|
$12,582.05
|
$13,125.59
|
$13,692.62
|
$14,284.14
|
$14,901.21
|
|
Estimated
Annual Expenses |
$304.82
|
$70.75
|
$73.80
|
$76.99
|
$80.32
|
$83.79
|
$87.41
|
$91.18
|
$95.12
|
$99.23
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.55%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
0.68%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.45%
|
8.96%
|
13.67%
|
18.58%
|
23.70%
|
29.04%
|
34.61%
|
40.43%
|
46.50%
|
52.83%
|
|
End
of Year Balance |
$10,445.00
|
$10,896.22
|
$11,366.94
|
$11,857.99
|
$12,370.26
|
$12,904.66
|
$13,462.14
|
$14,043.70
|
$14,650.39
|
$15,283.29
|
|
Estimated
Annual Expenses |
$56.22
|
$72.56
|
$75.69
|
$78.96
|
$82.38
|
$85.93
|
$89.65
|
$93.52
|
$97.56
|
$101.77
|
|
| ||||||||||
|
Class
A2 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.45%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
0.58%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.55%
|
9.17%
|
14.00%
|
19.04%
|
24.30%
|
29.79%
|
35.53%
|
41.52%
|
47.78%
|
54.31%
|
|
End
of Year Balance |
$10,455.00
|
$10,917.11
|
$11,399.65
|
$11,903.51
|
$12,429.65
|
$12,979.04
|
$13,552.71
|
$14,151.74
|
$14,777.25
|
$15,430.40
|
|
Estimated
Annual Expenses |
$46.02
|
$61.98
|
$64.72
|
$67.58
|
$70.57
|
$73.69
|
$76.94
|
$80.34
|
$83.89
|
$87.60
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.30%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
0.43%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.70%
|
9.48%
|
14.48%
|
19.71%
|
25.18%
|
30.90%
|
36.88%
|
43.14%
|
49.68%
|
56.52%
|
|
End
of Year Balance |
$10,470.00
|
$10,948.48
|
$11,448.83
|
$11,972.04
|
$12,519.16
|
$13,091.29
|
$13,689.56
|
$14,315.17
|
$14,969.37
|
$15,653.47
|
|
Estimated
Annual Expenses |
$30.71
|
$46.05
|
$48.15
|
$50.35
|
$52.66
|
$55.06
|
$57.58
|
$60.21
|
$62.96
|
$65.84
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.30%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
0.36%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.70%
|
9.56%
|
14.64%
|
19.96%
|
25.53%
|
31.35%
|
37.44%
|
43.82%
|
50.49%
|
57.47%
|
|
End
of Year Balance |
$10,470.00
|
$10,955.81
|
$11,464.16
|
$11,996.10
|
$12,552.72
|
$13,135.17
|
$13,744.64
|
$14,382.39
|
$15,049.73
|
$15,748.04
|
|
Estimated
Annual Expenses |
$30.71
|
$38.57
|
$40.36
|
$42.23
|
$44.19
|
$46.24
|
$48.38
|
$50.63
|
$52.98
|
$55.44
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.30%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
0.34%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.70%
|
9.58%
|
14.69%
|
20.03%
|
25.62%
|
31.47%
|
37.60%
|
44.01%
|
50.72%
|
57.74%
|
|
End
of Year Balance |
$10,470.00
|
$10,957.90
|
$11,468.54
|
$12,002.97
|
$12,562.31
|
$13,147.71
|
$13,760.39
|
$14,401.62
|
$15,072.74
|
$15,775.13
|
|
Estimated
Annual Expenses |
$30.71
|
$36.43
|
$38.12
|
$39.90
|
$41.76
|
$43.71
|
$45.74
|
$47.88
|
$50.11
|
$52.44
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
10 Invesco Short
Duration Inflation Protected Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco Short
Duration Inflation Protected Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
SDIP-PRO-1
|
Prospectus
June 28, 2024
Class:
A (STBAX), C (STBCX), R (STBRX), Y (STBYX), R5 (ISTBX), R6 (ISTFX)
Invesco
Short Term Bond Fund
Class
R5 shares will be closed to new investors after the close of business on September 30, 2024.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
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A-1
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco
Short Term Bond Fund
Fund Summary
Investment
Objective(s)
The Fund's investment
objective is total return, comprised of current income and capital appreciation.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y or Class R6 shares.
You
may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000
in the Invesco Funds. More information about these and other discounts is available from your financial professional and
in the section “Shareholder Account Information – Initial Sales Charges (Class A Shares Only)” on page A-3 of the
prospectus and the section “Purchase, Redemption and Pricing of Shares-Purchase and Redemption of Shares” on page L-1 of
the statement of additional information (SAI).
|
Class:
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A
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C
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R
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Y
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R5
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R6
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Management
Fees |
0.32
% |
0.32
% |
0.32
% |
0.32
% |
0.32
% |
0.32
% |
|
| ||||||
|
Distribution
and/or Service (12b-1) Fees |
0.15
|
0.65
|
0.50
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None
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None
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None
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| ||||||
|
Other
Expenses |
0.18
|
0.18
|
0.18
|
0.18
|
0.15
|
0.08
|
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Total
Annual Fund Operating Expenses |
0.65
|
1.15
|
1.00
|
0.50
|
0.47
|
0.40
|
|
| ||||||
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Fee
Waiver and/or Expense Reimbursement2
|
None
|
0.15
|
None
|
None
|
None
|
None
|
|
| ||||||
|
Total
Annual Fund Operating Expenses After Fee
Waiver
and/or Expense Reimbursement |
0.65
|
1.00
|
1.00
|
0.50
|
0.47
|
0.40
|
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| ||||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
|
2 |
Invesco Distributors,
Inc. (Invesco Distributors) has contractually agreed to waive 0.15% of Rule 12b-1 distribution plan payments of Class C shares. Unless
Invesco Distributors continues the fee waiver agreement, it will terminate on June
30, 2025. During its term, the fee waiver agreement cannot be terminated or amended to reduce the 12b-1 fee waiver without
approval of the Board of Trustees.
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain equal to the Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement in the first year and the Total Annual Fund Operating Expenses thereafter.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 169%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in fixed-income securities, and
in derivatives and other instruments that have economic characteristics similar to such securities.
The
Fund invests primarily in investment grade fixed-income securities, including
corporate bonds, U.S. Treasury and agency securities and mortgage-backed and asset-backed securities. Investment grade securities are:
(i) securities rated BBB- or higher by S&P Global Ratings (S&P) or Baa3 or higher by Moody’s Investors Service, Inc.
(Moody’s) or an equivalent rating by another nationally recognized statistical rating organization (NRSRO), (ii) securities
with comparable short-term NRSRO ratings, or (iii) unrated securities determined by Invesco Advisers, Inc. (Invesco or the Adviser)
to be of comparable quality, each at the time of purchase.
The
Fund may invest up to 25% of its net assets in foreign debt securities,
including debt securities of issuers located in emerging markets countries, i.e., those that are generally in the early stages of their
industrial cycles. The Fund may invest up to 20% of its net assets in currencies and securities, including foreign currency derivatives,
denominated in currencies other than the U.S. dollar. The Fund may also invest in securities not considered foreign securities that carry
foreign credit exposure. The Fund may invest up to 20% of its net assets in securities considered below investment grade. Below investment
grade securities are commonly referred to as junk bonds.
The
Fund may purchase mortgage-backed and asset-backed securities such
as collateralized mortgage obligations (CMOs), collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) of any
rating, which are counted toward the 80% investment requirement.
The
Fund may invest in illiquid or thinly traded investments. The Fund may
also invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended. The Fund may also purchase municipal securities. The Fund’s investments may include securities that do
not produce immediate cash income, such as zero coupon securities and payment-in-kind securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund may buy or sell a security with payment and delivery taking place in the future. The Fund may
also engage in “to be announced” (TBA) transactions, which are transactions in which a fund buys or sells mortgage-backed
securities on a forward commitment basis. The Fund may engage in short sales of TBA
1 Invesco
Short Term Bond Fund
mortgages, including
short sales on TBA mortgages the Fund does not own. Generally, the Fund will sell a TBA mortgage short to (1) take advantage of an expected
decline in mortgage valuations or (2) to hedge against the potential underperformance of the mortgage sector.
The
Fund can invest in derivative instruments including swap contracts, options,
futures contracts and forward foreign currency contracts.
The
Fund can use swap contracts, including interest rate swaps, to seek
to hedge or adjust its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to create long
or short exposure to corporate or sovereign debt securities. The Fund can further use credit default index swaps to seek to hedge credit
risk or take a position on a basket of credit entities; total return swaps to gain exposure to a reference asset; and volatility swaps
to adjust the volatility profile of the Fund.
The
Fund can use options to seek investment return or to mitigate risk and
to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated. The Fund can also use credit
default swap options to gain the right to enter into a credit default swap at a specified future date. The Fund can further use swaptions
(options on swaps) to manage interest rate risk; and options on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures, to increase
or reduce its (create long or short) exposure to interest rate changes. The Fund can also use currency futures to increase or decrease
its exposure to foreign currencies and to hedge against adverse movements in the foreign currencies in which portfolio securities are
denominated.
The
Fund can engage in foreign currency transactions either on a spot basis
or through forward foreign currency contracts to gain or mitigate the risk of foreign currency exposure. Spot contracts allow for prompt
delivery and settlement at the rate prevailing in the currency exchange market at the time.
The
Fund utilizes active duration (i.e., making investments to reduce or increase
the sensitivity of the Fund’s portfolio to interest rate changes) and yield curve positioning (i.e., making investments that allow
the Fund to benefit from varying interest rates) for risk management and for generating alpha.
The
portfolio managers utilize the Bloomberg 1-3 Year Government/Credit
Index as a reference in structuring the portfolio, but the Fund is not an index fund. The portfolio managers decide on appropriate risk
factors such as sector and issuer weightings and duration relative to this index. The portfolio managers then employ proprietary technology
to calculate appropriate position sizes for each of these risk factors. In doing so, the portfolio managers consider recommendations from
a globally interconnected team of specialist decision makers in positioning the Fund to generate alpha.
The
portfolio managers generally rely upon a team of market-specific specialists
for trade execution and for assistance in determining efficient ways (in terms of cost-efficiency and security selection) to implement
those recommendations. Although a variety of specialists provide input in the management of the Fund, the portfolio managers retain responsibility
for ensuring the Fund is positioned appropriately in terms of risk exposures and position sizes.
Specialists
employ a bottom-up approach to recommend larger or smaller
exposure to specific risk factors. In general, specialists will look for attractive risk-reward opportunities and securities that best
enable the Fund to pursue those opportunities. The portfolio managers consider the recommendations of these market-specific specialists
in adjusting the Fund’s risk exposures and security selection on a real-time basis using proprietary communication technology.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a
need to limit or
reduce the Fund’s exposure to a particular security or issuer, degradation of an issuer’s credit quality or general liquidity
needs of the Fund.
The
Fund will attempt to maintain a dollar-weighted average portfolio maturity
and duration of less than three years, however due to events affecting the bond markets and interest rate changes the maturity and duration
of the portfolio might not meet the target at all times.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and environmental, social and governance (“ESG”) considerations. Credit quality analysis for
certain issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease
or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally. During
a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance
that specific investments held by the Fund will rise in value.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened
2 Invesco
Short Term Bond Fund
volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related securities may have
less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances in interest rate, term,
size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages, which are loans made
to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity risk
is even greater for mortgage pools that include subprime mortgages.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its
foreign
currency exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the
value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies)
to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used,
are not always successful.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. Without the approval of debt holders, some governmental
debtors have in the past been able to reschedule or restructure their debt payments or declare moratoria on payments.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to
evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund
3 Invesco
Short Term Bond Fund
holds
subordinate tranches of the CLO that absorb losses from the defaults before senior tranches. In addition, CLOs are subject to interest
rate risk and credit risk.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also
be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Sector
Focus Risk. The Fund may from time to time have a significant
amount of its assets invested in one market sector or group of related industries. In this event, the Fund’s performance will depend
to a greater extent on the overall condition of the sector or group of industries and there is increased risk that the Fund will lose
significant value if conditions adversely affect that sector or group of industries.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. Liquid securities can become illiquid during periods of market stress. If a significant amount of the Fund’s
securities become illiquid, the Fund may not be able to timely pay redemption proceeds and may need to sell securities at significantly
reduced prices.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Municipal
Securities Risk. The
risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a
decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate
the current federal income
tax
exemption on municipal securities or otherwise adversely affect the current federal or state tax status of municipal securities.
Zero
Coupon or Pay-In-Kind Securities Risk.
The value, interest rates, and liquidity of non-cash paying instruments, such as zero coupon and pay-in-kind securities, are subject to
greater fluctuation than other types of securities. The higher yields and interest rates on pay-in-kind securities reflect the payment
deferral and increased credit risk associated with such instruments and that such investments may represent a higher credit risk than
loans that periodically pay interest.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions subject the Fund to market risk because the value or yield of a security at delivery may
be more or less than the purchase price or yield generally available when delivery occurs, and counterparty risk because the Fund relies
on the buyer or seller, as the case may be, to consummate the transaction. These transactions also have a leveraging effect on the Fund
because the Fund commits to purchase securities that it does not have to pay for until a later date, which increases the Fund’s
overall investment exposure and, as a result, its volatility.
TBA
Transactions Risk.
TBA transactions involve the risk of loss if the securities received are less favorable than what was anticipated by the Fund when entering
into the TBA transaction, or if the counterparty fails to deliver the securities. When the Fund enters into a short sale of a TBA mortgage
it does not own, the Fund may have to purchase deliverable mortgages to settle the short sale at a higher price than anticipated, thereby
causing a loss. As there is no limit on how much the price of mortgage securities can increase, the Fund’s exposure is unlimited.
The Fund may not always be able to purchase mortgage securities to close out the short position at a particular time or at an acceptable
price. In addition, taking short positions results in a form of leverage, which could increase the volatility of the Fund’s share
price.
Short
Position Risk.
Because the Fund’s potential loss on a short position arises from increases in the value of the asset sold short, the Fund will
incur a loss on a short position, which is theoretically unlimited, if the price of the asset sold short increases from the short sale
price. The counterparty to a short position or other market factors may prevent the Fund from closing out a short position at a desirable
time or price and may reduce or eliminate any gain or result in a loss. In a rising market, the Fund’s short positions will cause
the Fund to underperform the overall market and its peers that do not engage in shorting. If the Fund holds both long and short positions,
and both positions decline simultaneously, the short positions will not provide any buffer (hedge) from declines in value of the Fund’s
long positions. Certain types of short positions involve leverage, which may exaggerate any losses, potentially more than the actual cost
of the investment, and will increase the volatility of the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as
part of a credit analysis may affect the Fund’s exposure to certain issuers or industries and may not work as intended. Information
used to evaluate such factors may not be readily available, complete or accurate, and may vary across providers and issuers. There is
no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee
4 Invesco
Short Term Bond Fund
that
the Adviser’s investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory,
or tax developments may adversely affect management of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The bar chart shows changes
in the performance of the Fund from year to year as of December 31. The performance table compares the Fund's performance to that of a
style-specific benchmark and
a broad-based securities market benchmark (in that order).
The Fund's past performance (before and after taxes)
is not necessarily an indication of its future performance.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund's website at www.invesco.com/us.
|
Class
C |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
0.83%
|
|
Best
Quarter |
June
30, 2020 |
4.92%
|
|
Worst
Quarter |
March
31, 2020 |
-3.64%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
C |
|
|
|
|
|
Return
Before Taxes |
8/30/2002
|
4.85
% |
1.39
% |
1.27
% |
|
Return
After Taxes on Distributions |
|
3.16
|
0.47
|
0.43
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
2.84
|
0.67
|
0.61
|
|
| ||||
|
Class
A |
4/30/2004
|
3.12
|
1.23
|
1.31
|
|
| ||||
|
Class
R |
4/30/2004
|
5.21
|
1.40
|
1.21
|
|
| ||||
|
Class
Y |
10/3/2008
|
5.86
|
1.91
|
1.71
|
|
| ||||
|
Class
R5 |
4/30/2004
|
5.77
|
1.95
|
1.76
|
|
| ||||
|
Class
R6 |
9/24/2012
|
5.84
|
1.99
|
1.81
|
|
| ||||
|
Bloomberg
1-3 Year Government/Credit Index
(reflects
no deduction for fees, expenses or taxes) |
|
4.61
|
1.51
|
1.27
|
|
| ||||
|
Bloomberg
U.S. Aggregate Bond Index (reflects no
deduction
for fees, expenses or taxes) |
|
5.53
|
1.10
|
1.81
|
|
| ||||
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant
to investors who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual
retirement accounts. After-tax
returns are shown for Class C shares only and after-tax returns for other classes will vary.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Purchase
and Sale of Fund Shares
You
may purchase, redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246.
Shares of the Fund, other than Class R5 and Class R6 shares, may also be purchased, redeemed or exchanged on any business day through
our website at www.invesco.com/us or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
The
minimum investments for Class A, C, R and Y shares for fund accounts
are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. With respect to Class R5 and Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R5 or Class R6 shares,
the minimum initial investment in each share class is $1 million, unless such investment is made by (i) an investment company, as defined
under the Investment Company Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate
at least $100 million in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case
there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement, such as
a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you purchase
the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor or its related
companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest
by influencing the
5 Invesco
Short Term Bond Fund
broker-dealer or
other intermediary and your salesperson or financial adviser to recommend the Fund over another investment. Ask your salesperson or financial
adviser or visit your financial intermediary’s website for more information.
Objective(s)
and Strategies
The Fund’s
investment objective is total return, comprised of current income and capital appreciation. The Fund’s investment objective may
be changed by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in fixed-income securities, and in derivatives and other instruments that have economic
characteristics similar to such securities.
The
Fund invests primarily in investment grade fixed-income securities, including
corporate bonds, U.S. Treasury and agency securities and mortgage-backed and asset-backed securities. Investment grade securities are:
(i) securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s or an equivalent rating by another NRSRO, (ii) securities
with comparable short-term NRSRO ratings, or (iii) unrated securities determined by the Adviser to be of comparable quality, each
at the time of purchase.
The
Fund may invest up to 25% of its net assets in foreign debt securities,
including debt securities of issuers located in emerging markets countries, i.e., those that are generally in the early stages of their
industrial cycles. The Fund may invest up to 20% of its net assets in currencies and securities, including foreign currency derivatives,
denominated in currencies other than the U.S. dollar. The Fund may also invest in securities not considered foreign securities that carry
foreign credit exposure. The Fund may invest up to 20% of its net assets in securities considered below investment grade. Below investment
grade securities are commonly referred to as junk bonds.
The
Fund may purchase mortgage-backed and asset-backed securities such
as CMOs, CLOs and CDOs of any rating, which are counted toward the 80% investment requirement.
The
Fund may invest in illiquid or thinly traded investments. The Fund may
also invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended. The Fund may also purchase municipal securities. The Fund’s investments may include securities that do
not produce immediate cash income, such as zero coupon securities and payment-in-kind securities. Zero coupon securities are debt securities
that do not entitle the holder to any periodic payment of interest prior to maturity or a specified date when the securities begin paying
current interest. Payment-in-kind securities are debt securities that pay interest through the issuance of additional securities.
The
Fund may purchase and sell securities on a when-issued and delayed
delivery basis, which means that the Fund may buy or sell a security with payment and delivery taking place in the future. The payment
obligation and the interest rate are fixed at the time the Fund enters into the commitment. No income accrues on such securities until
the date the Fund actually takes delivery of the securities. The Fund may also engage in TBA transactions, which are transactions in which
a fund buys or sells mortgage-backed securities on a forward commitment basis. A TBA transaction typically does not designate the actual
security to be delivered and only includes an approximate principal amount at the time the TBA is entered into. The Fund may also engage
in short sales of TBA mortgages, including short sales of TBA mortgages the Fund does not own. Generally, the Fund will sell a TBA mortgage
short to (1) take advantage of an expected decline in mortgage valuations or (2) to hedge against the potential underperformance of the
mortgage sector.
The
Fund can invest in derivative instruments including swap contracts, options,
futures contracts and forward foreign currency contracts.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap. The Fund can use swap contracts, including interest rate swaps, to seek to hedge or adjust
its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to create long or short exposure
to corporate or sovereign debt securities. The Fund can further use credit default index swaps to seek to hedge credit risk or take a
position on a basket of credit entities; total return swaps to gain exposure to a reference asset; and volatility swaps to adjust the
volatility profile of the Fund.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options to seek investment return or to mitigate risk and
to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated. The Fund can also use credit
default swap options to gain the right to enter into a credit default swap at a specified future date. The Fund can further use swaptions
(options on swaps) to manage interest rate risk; and options on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of the futures contract
tends to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures
contracts are settled by purchasing an offsetting contract, physically delivering the underlying asset on the settlement date or paying
a cash settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures, to increase or reduce
its (create long or short) exposure to interest rate changes. A long derivative position involves the Fund buying a derivative with the
anticipation of a price increase of the underlying asset, and a short derivative position involves the Fund writing (selling) a derivative
with the anticipation of a price decrease of the underlying asset. The Fund can also use currency futures to increase or decrease its
exposure to foreign currencies and to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated.
The
Fund can engage in foreign currency transactions either on a spot basis
or through forward foreign currency contracts to gain or mitigate the risk of foreign currency exposure. Spot contracts allow for prompt
delivery and settlement at the rate prevailing in the currency exchange market at the time.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. Forward foreign currency contracts are used to protect
against uncertainty in the level of future currency exchange rates or to gain or modify exposure to a particular currency.
The
Fund utilizes active duration (i.e., making investments to reduce or increase
the sensitivity of the Fund’s portfolio to interest rate changes) and
6 Invesco
Short Term Bond Fund
yield curve positioning
(i.e., making investments that allow the Fund to benefit from varying interest rates) for risk management and for generating alpha.
The
portfolio managers utilize the Bloomberg 1-3 Year Government/Credit
Index as a reference in structuring the portfolio, but the Fund is not an index fund. The portfolio managers decide on appropriate risk
factors such as sector and issuer weightings and duration relative to this index. The portfolio managers then employ proprietary technology
to calculate appropriate position sizes for each of these risk factors. In doing so, the portfolio managers consider recommendations from
a globally interconnected team of specialist decision makers in positioning the Fund to generate alpha.
The
portfolio managers generally rely upon a team of market-specific specialists
for trade execution and for assistance in determining efficient ways (in terms of cost-efficiency and security selection) to implement
those recommendations. Although a variety of specialists provide input in the management of the Fund, the portfolio managers retain responsibility
for ensuring the Fund is positioned appropriately in terms of risk exposures and position sizes.
Specialists
employ a bottom-up approach to recommend larger or smaller
exposure to specific risk factors. In general, specialists will look for attractive risk-reward opportunities and securities that best
enable the Fund to pursue those opportunities. The portfolio managers consider the recommendations of these market-specific specialists
in adjusting the Fund’s risk exposures and security selection on a real-time basis using proprietary communication technology.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality or general liquidity needs of the Fund.
The
Fund will attempt to maintain a dollar-weighted average portfolio maturity
and duration of less than three years, however due to events affecting the bond markets and interest rate changes the maturity and duration
of the portfolio might not meet the target at all times.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
The
credit research process utilized by the Fund to implement its investment
strategy in pursuit of its investment objective considers factors that may include, but are not limited to, an issuer’s
operations, capital structure and ESG
considerations. Credit quality analysis for certain
issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an issuer. The portfolio
managers may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund. In addition,
not all issuers or investments in the Fund may undergo a credit quality analysis that considers ESG factors, and not all investments held
by the Fund will rate strongly on ESG criteria.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant
impact on the value of the Fund’s investments, as well as the financial markets and global economy generally. Such circumstances
may also impact the ability of the Adviser to effectively implement the Fund’s investment strategy. During a general downturn in
the financial markets, multiple asset classes may decline in value. When markets perform well, there can be no assurance that specific
investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary
7 Invesco
Short Term Bond Fund
policy
or regulatory actions may expose fixed income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price
may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S.
government’s inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing
financial or economic conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s
debt limit may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including
in the U.S. government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund,
including its operations, universe of potential investment options, and return potential, and could also result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially
lower the Fund’s performance returns.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower
capacity to make
timely payments on their mortgages. Liquidity risk is even greater for mortgage pools that include subprime mortgages.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Changes in political and economic factors in one country or region could adversely affect conditions in another country or region. Investments
in foreign securities may also expose the Fund to time-zone arbitrage risk. At times, the Fund may emphasize investments in a particular
country or region and may be subject to greater risks from adverse events that occur in that country or region. Unless the Fund has hedged
its foreign currency exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may
cause the value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign
currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies,
if used, are not always successful. For instance, currency forward contracts, if used by the Fund, could reduce performance if there are
unanticipated changes in currency exchange rates.
Foreign
Government Debt Risk. Investments
in foreign government debt securities (sometimes referred to as sovereign debt securities) involve certain risks in addition to those
relating to foreign securities or debt securities generally. The issuer of the debt or the governmental authorities that control the repayment
of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Fund
may have limited recourse in the event of a default against the defaulting government. A foreign government debtor’s willingness
or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign currency reserves, the availability of sufficient foreign exchange, the relative size of the debt burden, the foreign
government debtor’s policy toward its principal international lenders and local political constraints. Certain issuers of foreign
government debt may be dependent on disbursements from foreign governments, multinational agencies and other entities to reduce principal
and interest arrearages on their debt. Without the approval of debt holders, some governmental debtors have in the past been able to reschedule
or restructure their debt payments or declare moratoria on payments.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may
8 Invesco
Short Term Bond Fund
differ from those
of more established securities markets, and settlement delays may result in the inability to invest assets or dispose of portfolio securities
in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease in the level of liquidity
of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (PCAOB) inspection, investigation and enforcement
capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting or the audits conducted by
audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries
may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market
value due to adverse
economic, regulatory, political or company developments than higher rated or investment grade securities. Prices of high yield debt securities
tend to be very volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable
time or price, particularly in times of negative sentiment toward high yield securities.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market
9 Invesco
Short Term Bond Fund
illiquidity,
the Fund may not be able to prevent further losses of value in its derivatives holdings and the liquidity of the Fund and its ability
to meet redemption requests may be impaired to the extent that a substantial portion of the Fund’s otherwise liquid assets must
be used as margin. Another consequence of illiquidity is that the Fund may be required to hold a derivative instrument to maturity and
take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a security denominated in a foreign currency or protect against possible losses
from changes in the relative value of the U.S. dollar against a foreign currency. They are subject to the risk that anticipated currency
movements will not be accurately predicted or do not correspond accurately to changes in the value of the fund's holdings, which could
result in losses and additional transaction costs. The use of forward contracts could reduce performance if there are unanticipated changes
in currency prices. A contract to sell a foreign currency would limit any potential gain that might be realized if the value of the currency
increases. A forward foreign currency contract may also result in losses in the event of a default or bankruptcy of the counterparty.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted for clearing to a central clearing house counterparty, and the Fund faces
the central clearing house counterparty by means of an account with a futures commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives
strategies
may not always be successful. For example, to the extent that the Fund uses derivatives for hedging or to gain or limit exposure to a
particular market or market segment, there may be imperfect correlation between the value of the derivative instrument and the value of
the instrument being hedged or the relevant market or market segment, in which case the Fund may not realize the intended benefits. There
is also the risk that during adverse market conditions, an instrument which would usually operate as a hedge provides no hedging benefits
at all. The Fund’s use of derivatives may be limited by the requirements for taxation of the Fund as a regulated investment company.
Sector
Focus Risk. The Fund may from time to time have a significant
amount of its assets invested in one market sector or group of related industries. The prices of stocks of issuers in a sector or group
of industries may go up and down in response to changes in economic conditions, government regulations, availability of basic resources
or supplies, or other events that affect that industry or sector more than others. In this event, the Fund’s performance will depend
to a greater extent on the overall condition of the sector or group of industries and there is increased risk that the Fund will lose
significant value if conditions adversely affect that sector or group of industries. Information about the Fund’s investment in
a market sector or group of industries is available in its annual and semi-annual reports to shareholders and in its reports on Form N-PORT
filed with the SEC.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. An investment may be illiquid due to a lack of trading volume in the investment or if the investment is privately
placed and not traded in any public market or is otherwise restricted from trading. Liquid securities can become illiquid during periods
of market stress. If a significant amount of the Fund’s securities become illiquid, the Fund may not be able to timely pay redemption
proceeds and may need to sell securities at significantly reduced prices.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt securities, which are not registered for sale pursuant to an exemption from
registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Municipal
Securities Risk.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
10 Invesco
Short Term Bond Fund
Municipal obligations
may be more susceptible to downgrades or defaults during recessions or similar periods of economic stress. Municipal securities structured
as revenue bonds are generally not backed by the taxing power of the issuing municipality but rather the revenue from the particular project
or entity for which the bonds were issued. If the Internal Revenue Service determines that an issuer of a municipal security has not complied
with applicable tax requirements, interest from the security could be treated as taxable, which could result in a decline in the security’s
value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate the current federal income
tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status of municipal securities.
Zero
Coupon or Pay-In-Kind Securities Risk.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and less liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular interest payment periods. Prices on non-cash-paying instruments
may be more sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances
than cash-paying securities with similar credit ratings, and thus may be more speculative. Investors may purchase zero coupon and pay-in-kind
securities at a price below the amount payable at maturity. Because such securities do not entitle the holder to any periodic payments
of interest prior to maturity, this prevents any reinvestment of interest payments at prevailing interest rates if prevailing interest
rates rise. The higher yields and interest rates on pay-in-kind securities reflect the payment deferral and increased credit risk associated
with such instruments and that such investments may represent a higher credit risk than coupon loans. Pay-in-kind securities may have
a potential variability in valuations because their continuing accruals require continuing judgments about the collectability of the deferred
payments and the value of any associated collateral. Special tax considerations are associated with investing in certain lower-grade securities,
such as zero coupon or pay-in-kind securities.
When-Issued,
Delayed Delivery and Forward Commitment Risks.
When-issued and delayed delivery transactions are subject to market risk as the value or yield of a security at delivery may be more or
less than the purchase price or the yield generally available on securities when delivery occurs. In addition, the Fund is subject to
counterparty risk because it relies on the buyer or seller, as the case may be, to consummate the transaction, and failure by the counterparty
to complete the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous.
These transactions have a leveraging effect on the Fund because the Fund commits to purchase securities that it does not have to pay for
until a later date. These investments therefore increase the Fund’s overall investment exposure and, as a result, its volatility.
Typically, no income accrues on securities the Fund has committed to purchase prior to the time delivery of the securities is made.
TBA
Transactions Risk.
TBA transactions involve the risk that the securities received may be less favorable than what was anticipated by the Fund when entering
into the TBA transaction. TBA transactions also involve the risk that the counterparty will fail to deliver the securities, exposing the
Fund to further losses. Whether or not the Fund takes delivery of the securities at the termination date of a TBA transaction, the Fund
will nonetheless be exposed to changes in the value of the underlying investments during the term of the agreement. If the Fund sells
short TBA mortgages that it does not own and the mortgages increase in value, the Fund may be required to pay a higher price than anticipated
to purchase the deliverable mortgages to settle the short sale and thereby incur a loss. A short position in TBA mortgages poses more
risk than holding the same TBA mortgages long. It is possible that the market value of the mortgage securities the Fund holds in long
positions will decline at the same time that the market value of the mortgage securities the Fund has sold short increases, thereby magnifying
any losses. The more the Fund pays to purchase the mortgage securities sold short, the more it will lose on the transaction, which adversely
affects its share price. The loss on a long
position is limited
to what the Fund originally paid for the TBA mortgage, together with any transaction costs. In short transactions, there is no limit on
how much the price of a security can increase, thus the Fund’s exposure is theoretically unlimited. The Fund normally closes a
short sale of TBA mortgages that it does not own by purchasing mortgage securities on the open market and delivering them to the broker.
The Fund may not always be able to complete or “close out” the short position by purchasing mortgage securities at a particular
time or at an acceptable price. The Fund incurs a loss if the Fund is required to buy the deliverable mortgage securities at a time when
they have appreciated in value from the date of the short sale. The Fund will incur increased transaction costs associated with selling
TBA mortgages short. In addition, taking short positions results in a form of leverage. As a result, changes in the value of a Fund’s
investments will have a larger effect on its share price than if it did not engage in these transactions.
Short
Position Risk.
The Fund will incur a loss on a short position if the price of the asset sold short increases from the short sale price. Because the Fund’s
potential loss on a short position arises from increases in the value of the asset sold short, the extent of such loss, like the price
of the asset sold short, is theoretically unlimited. Short sales are speculative transactions and involve greater reliance on the Adviser’s
ability to accurately anticipate the future value of an asset or markets in general. Any gain on a short position is decreased, and any
loss is increased, by the amount of any payment, dividend, interest or other transaction costs that the Fund may be required to pay with
respect to the asset sold short. The counterparty to a short position or market factors, such as a sharp increase in prices, may prevent
the Fund from closing out a short position at a desirable time or price and may reduce or eliminate any gain or result in a loss. In a
rising market, the Fund’s short positions will cause the Fund to underperform the overall market and its peers that do not engage
in shorting. If the Fund holds both long and short positions, both positions may decline simultaneously, in which case the short positions
will not provide any buffer (hedge) from declines in value of the Fund’s long positions. Certain types of short positions involve
leverage, which may exaggerate any losses, potentially more than the actual cost of the investment, and will increase the volatility of
the Fund’s returns.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of a credit research process to implement the Fund's investment strategy in pursuit
of its investment objective may vary, and not every ESG factor may be identified or evaluated for every investment, and not every investment
or issuer may be evaluated for ESG considerations. The incorporation of ESG factors as part of a credit analysis may affect the Fund’s
exposure to certain issuers or industries and may not work as intended. The Fund may underperform other funds that do not incorporate
ESG factors or that use a different methodology to identify and/or incorporate ESG factors. Information used to evaluate such factors
may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined characteristic,
which could negatively impact the ability to accurately assess credit quality, which could negatively impact the Fund’s performance.
There is no guarantee that the incorporation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in high brokerage costs, which may lower the Fund’s actual return. Active trading
also may increase the proportion of the Fund’s gains that are short term, which are taxed at a higher rate than long term
gains.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available
11 Invesco
Short Term Bond Fund
to the Adviser
in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco serves
as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment portfolios
that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s day-to-day
management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor in interest
to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund's SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps markets.
The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies or
this prospectus.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.32% of the Fund's average daily net assets, after fee
waiver and/or expense reimbursement, if any.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Matthew
Brill, CFA, Portfolio Manager, who has been responsible for the Fund since 2014 and has been associated with Invesco and/or its affiliates
since 2013.
■
Chuck
Burge, Portfolio Manager, who has been responsible for the Fund since 2009 and has been associated with Invesco and/or its affiliates
since 2002.
■
Michael
Hyman, Portfolio Manager, who has been responsible for the Fund since 2013 and has been associated with Invesco and/or its affiliates
since 2013.
■
Todd
Schomberg, CFA, Portfolio Manager, who has been responsible for the Fund since 2020 and has been associated with Invesco and/or its affiliates
since 2016.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers’
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Sales
Charges
Purchases of Class
A shares of the Fund are subject to the maximum 2.50% initial sales charge as listed under the heading “Category IV Initial Sales
Charges” in the “Shareholder Account Information—Initial Sales Charges (Class A Shares Only)” section of this
prospectus. Purchases of Class C shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one
year of purchase; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a
commission at the time of purchase. If you acquire Class C shares of any other Fund as a result of an exchange involving Class C shares
of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November 1, 2021, then the shares acquired as a result of the
exchange will not be subject to a CDSC. For more information on CDSCs, see the “Shareholder Account Information—Contingent
Deferred Sales Charges (CDSCs)” section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
12 Invesco
Short Term Bond Fund
The financial highlights
show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations of the Fund or any of
its share classes. The financial highlights table is intended to help you understand the Fund’s financial performance. Certain
information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial statements, is included in the Fund’s annual
report, which is available upon request.
|
|
Net
asset
value,
beginning
of
period |
Net
investment
income(a)
|
Net
gains
(losses)
on
securities
(both
realized
and
unrealized)
|
Total
from
investment
operations
|
Dividends
from
net
investment
income
|
Return
of
capital
|
Total
distributions
|
Net
asset
value,
end
of
period |
Total
return(b)
|
Net
assets,
end
of period
(000's
omitted) |
Ratio
of
expenses
to
average
net
assets
with
fee waivers
and/or expenses
absorbed
|
Ratio
of
expenses
to
average net
assets
without
fee
waivers
and/or expenses
absorbed |
Ratio
of net
investment
income
to
average
net
assets |
Portfolio
turnover
(c)
|
|
Class
A | ||||||||||||||
|
Year
ended 02/29/24 |
$7.98
|
$0.35
|
$0.07
|
$0.42
|
$(0.37
) |
$—
|
$(0.37
) |
$8.03
|
5.33
% |
$1,106,368
|
0.65
% |
0.65
% |
4.40
% |
169
% |
|
Year
ended 02/28/23 |
8.37
|
0.23
|
(0.41
) |
(0.18
) |
(0.21
) |
—
|
(0.21
) |
7.98
|
(2.13
) |
1,217,102
|
0.64
|
0.64
|
2.85
|
155
|
|
Year
ended 02/28/22 |
8.68
|
0.13
|
(0.32
) |
(0.19
) |
(0.12
) |
—
|
(0.12
) |
8.37
|
(2.20
) |
1,407,707
|
0.62
|
0.62
|
1.49
|
141
|
|
Year
ended 02/28/21 |
8.66
|
0.16
|
0.04
|
0.20
|
(0.18
) |
—
|
(0.18
) |
8.68
|
2.33
|
1,527,875
|
0.63
|
0.63
|
1.85
|
245
|
|
Year
ended 02/29/20 |
8.47
|
0.23
|
0.20
|
0.43
|
(0.23
) |
(0.01
) |
(0.24
) |
8.66
|
5.08
|
655,357
|
0.65
|
0.65
|
2.62
|
155
|
|
| ||||||||||||||
|
Class
C | ||||||||||||||
|
Year
ended 02/29/24 |
7.98
|
0.32
|
0.07
|
0.39
|
(0.34
) |
—
|
(0.34
) |
8.03
|
4.96
|
94,151
|
1.00
|
1.15
|
4.05
|
169
|
|
Year
ended 02/28/23 |
8.38
|
0.20
|
(0.42
) |
(0.22
) |
(0.18
) |
—
|
(0.18
) |
7.98
|
(2.59
) |
120,755
|
0.99
|
1.14
|
2.50
|
155
|
|
Year
ended 02/28/22 |
8.68
|
0.10
|
(0.31
) |
(0.21
) |
(0.09
) |
—
|
(0.09
) |
8.38
|
(2.41
) |
183,817
|
0.97
|
1.12
|
1.14
|
141
|
|
Year
ended 02/28/21 |
8.66
|
0.13
|
0.03
|
0.16
|
(0.14
) |
—
|
(0.14
) |
8.68
|
1.93
|
237,167
|
0.98
|
0.98
|
1.50
|
245
|
|
Year
ended 02/29/20 |
8.47
|
0.19
|
0.21
|
0.40
|
(0.20
) |
(0.01
) |
(0.21
) |
8.66
|
4.71
|
158,968
|
1.00
|
1.15
|
2.27
|
155
|
|
| ||||||||||||||
|
Class
R | ||||||||||||||
|
Year
ended 02/29/24 |
8.00
|
0.32
|
0.06
|
0.38
|
(0.34
) |
—
|
(0.34
) |
8.04
|
4.83
|
42,921
|
1.00
|
1.00
|
4.05
|
169
|
|
Year
ended 02/28/23 |
8.39
|
0.20
|
(0.41
) |
(0.21
) |
(0.18
) |
—
|
(0.18
) |
8.00
|
(2.46
) |
42,348
|
0.99
|
0.99
|
2.50
|
155
|
|
Year
ended 02/28/22 |
8.70
|
0.10
|
(0.32
) |
(0.22
) |
(0.09
) |
—
|
(0.09
) |
8.39
|
(2.54
) |
45,537
|
0.97
|
0.97
|
1.14
|
141
|
|
Year
ended 02/28/21 |
8.68
|
0.13
|
0.04
|
0.17
|
(0.15
) |
—
|
(0.15
) |
8.70
|
1.98
|
50,473
|
0.98
|
0.98
|
1.50
|
245
|
|
Year
ended 02/29/20 |
8.49
|
0.20
|
0.20
|
0.40
|
(0.20
) |
(0.01
) |
(0.21
) |
8.68
|
4.70
|
6,210
|
1.00
|
1.00
|
2.27
|
155
|
|
| ||||||||||||||
|
Class
Y | ||||||||||||||
|
Year
ended 02/29/24 |
7.98
|
0.36
|
0.07
|
0.43
|
(0.38
) |
—
|
(0.38
) |
8.03
|
5.49
|
319,439
|
0.50
|
0.50
|
4.55
|
169
|
|
Year
ended 02/28/23 |
8.38
|
0.24
|
(0.42
) |
(0.18
) |
(0.22
) |
—
|
(0.22
) |
7.98
|
(2.10
) |
339,677
|
0.49
|
0.49
|
3.00
|
155
|
|
Year
ended 02/28/22 |
8.68
|
0.14
|
(0.31
) |
(0.17
) |
(0.13
) |
—
|
(0.13
) |
8.38
|
(1.94
) |
583,784
|
0.47
|
0.47
|
1.64
|
141
|
|
Year
ended 02/28/21 |
8.66
|
0.17
|
0.04
|
0.21
|
(0.19
) |
—
|
(0.19
) |
8.68
|
2.50
|
629,462
|
0.45
|
0.48
|
2.03
|
245
|
|
Year
ended 02/29/20 |
8.48
|
0.24
|
0.19
|
0.43
|
(0.24
) |
(0.01
) |
(0.25
) |
8.66
|
5.11
|
146,159
|
0.50
|
0.50
|
2.77
|
155
|
|
| ||||||||||||||
|
Class
R5 | ||||||||||||||
|
Year
ended 02/29/24 |
7.96
|
0.36
|
0.07
|
0.43
|
(0.38
) |
—
|
(0.38
) |
8.01
|
5.52
|
1,004
|
0.47
|
0.47
|
4.58
|
169
|
|
Year
ended 02/28/23 |
8.36
|
0.24
|
(0.42
) |
(0.18
) |
(0.22
) |
—
|
(0.22
) |
7.96
|
(2.08
) |
940
|
0.46
|
0.46
|
3.03
|
155
|
|
Year
ended 02/28/22 |
8.66
|
0.15
|
(0.31
) |
(0.16
) |
(0.14
) |
—
|
(0.14
) |
8.36
|
(1.89
) |
705
|
0.41
|
0.41
|
1.70
|
141
|
|
Year
ended 02/28/21 |
8.65
|
0.18
|
0.03
|
0.21
|
(0.20
) |
—
|
(0.20
) |
8.66
|
2.48
|
524
|
0.38
|
0.38
|
2.10
|
245
|
|
Year
ended 02/29/20 |
8.47
|
0.25
|
0.18
|
0.43
|
(0.24
) |
(0.01
) |
(0.25
) |
8.65
|
5.20
|
496
|
0.40
|
0.40
|
2.87
|
155
|
|
| ||||||||||||||
|
Class
R6 | ||||||||||||||
|
Year
ended 02/29/24 |
7.99
|
0.37
|
0.06
|
0.43
|
(0.39
) |
—
|
(0.39
) |
8.03
|
5.46
|
524,531
|
0.40
|
0.40
|
4.65
|
169
|
|
Year
ended 02/28/23 |
8.38
|
0.25
|
(0.41
) |
(0.16
) |
(0.23
) |
—
|
(0.23
) |
7.99
|
(1.88
) |
556,410
|
0.39
|
0.39
|
3.10
|
155
|
|
Year
ended 02/28/22 |
8.69
|
0.15
|
(0.32
) |
(0.17
) |
(0.14
) |
—
|
(0.14
) |
8.38
|
(1.95
) |
598,369
|
0.37
|
0.37
|
1.74
|
141
|
|
Year
ended 02/28/21 |
8.67
|
0.18
|
0.04
|
0.22
|
(0.20
) |
—
|
(0.20
) |
8.69
|
2.62
|
645,331
|
0.35
|
0.35
|
2.13
|
245
|
|
Year
ended 02/29/20 |
8.49
|
0.25
|
0.19
|
0.44
|
(0.25
) |
(0.01
) |
(0.26
) |
8.67
|
5.23
|
644,838
|
0.37
|
0.37
|
2.90
|
155
|
|
| ||||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns
based
upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges
and is not annualized for periods less than one
year,
if applicable. |
|
(c)
|
Portfolio
turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended February
28, 2021, the portfolio turnover calculation excludes
the
value of securities purchased of $1,288,591,313 in connection with the acquisition of Invesco Oppenheimer Limited-Term Bond Fund into
the Fund. |
13 Invesco
Short Term Bond Fund
Hypothetical Investment and Expense Information
In connection with
the final settlement reached between Invesco and certain of its affiliates with certain regulators, including the New York Attorney General’s
Office, the SEC and the Colorado Attorney General’s Office (the settlement) arising out of certain market timing and unfair pricing
allegations made against Invesco and certain of its affiliates, Invesco and certain of its affiliates agreed, among other things, to disclose
certain hypothetical information regarding investment and expense information to Fund shareholders. The chart below is intended to reflect
the annual and cumulative impact of the Fund’s expenses, including investment advisory fees and other Fund costs, on the Fund’s
returns over a 10-year period. The example reflects the following:
■
You
invest $10,000 in the Fund and hold it for the entire 10-year period;
■
Your
investment has a 5% return before expenses each year;
■
The
Fund’s current annual expense ratio includes, if applicable, any contractual fee waiver or expense reimbursement that would apply
for the period for which it was committed;
■
Hypotheticals
both with and without any applicable initial sales charge applied; and
■
There
is no sales charge on reinvested dividends.
There
is no assurance that the annual expense ratio will be the expense ratio
for the Fund’s classes for any of the years shown. This is only a hypothetical presentation made to illustrate what expenses and
returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
|
Class
A (Includes
Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
1.74%
|
6.17%
|
10.79%
|
15.61%
|
20.64%
|
25.89%
|
31.37%
|
37.08%
|
43.04%
|
49.26%
|
|
End
of Year Balance |
$10,174.13
|
$10,616.70
|
$11,078.53
|
$11,560.45
|
$12,063.33
|
$12,588.08
|
$13,135.66
|
$13,707.06
|
$14,303.32
|
$14,925.51
|
|
Estimated
Annual Expenses |
$314.75
|
$67.57
|
$70.51
|
$73.58
|
$76.78
|
$80.12
|
$83.60
|
$87.24
|
$91.03
|
$94.99
|
|
| ||||||||||
|
Class
A (Without Maximum Sales
Charge)
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
0.65%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.35%
|
8.89%
|
13.63%
|
18.57%
|
23.73%
|
29.11%
|
34.73%
|
40.59%
|
46.71%
|
53.09%
|
|
End
of Year Balance |
$10,435.00
|
$10,888.92
|
$11,362.59
|
$11,856.86
|
$12,372.63
|
$12,910.84
|
$13,472.46
|
$14,058.51
|
$14,670.06
|
$15,308.21
|
|
Estimated
Annual Expenses |
$66.41
|
$69.30
|
$72.32
|
$75.46
|
$78.75
|
$82.17
|
$85.75
|
$89.48
|
$93.37
|
$97.43
|
|
| ||||||||||
|
Class
C2
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.15%
|
1.15%
|
1.15%
|
1.15%
|
1.15%
|
1.15%
|
1.15%
|
0.65%
|
0.65%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.00%
|
8.00%
|
12.16%
|
16.48%
|
20.96%
|
25.62%
|
30.46%
|
35.48%
|
41.37%
|
47.52%
|
|
End
of Year Balance |
$10,400.00
|
$10,800.40
|
$11,216.22
|
$11,648.04
|
$12,096.49
|
$12,562.20
|
$13,045.84
|
$13,548.10
|
$14,137.44
|
$14,752.42
|
|
Estimated
Annual Expenses |
$102.00
|
$121.90
|
$126.60
|
$131.47
|
$136.53
|
$141.79
|
$147.25
|
$152.92
|
$89.98
|
$93.89
|
|
| ||||||||||
|
Class
R |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.00%
|
8.16%
|
12.49%
|
16.99%
|
21.67%
|
26.54%
|
31.60%
|
36.86%
|
42.33%
|
48.02%
|
|
End
of Year Balance |
$10,400.00
|
$10,816.00
|
$11,248.64
|
$11,698.59
|
$12,166.53
|
$12,653.19
|
$13,159.32
|
$13,685.69
|
$14,233.12
|
$14,802.44
|
|
Estimated
Annual Expenses |
$102.00
|
$106.08
|
$110.32
|
$114.74
|
$119.33
|
$124.10
|
$129.06
|
$134.23
|
$139.59
|
$145.18
|
|
| ||||||||||
|
Class
Y |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
0.50%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.50%
|
9.20%
|
14.11%
|
19.24%
|
24.61%
|
30.22%
|
36.08%
|
42.20%
|
48.60%
|
55.29%
|
|
End
of Year Balance |
$10,450.00
|
$10,920.25
|
$11,411.66
|
$11,925.18
|
$12,461.81
|
$13,022.59
|
$13,608.61
|
$14,221.00
|
$14,860.95
|
$15,529.69
|
|
Estimated
Annual Expenses |
$51.13
|
$53.43
|
$55.83
|
$58.34
|
$60.97
|
$63.71
|
$66.58
|
$69.57
|
$72.70
|
$75.98
|
|
| ||||||||||
|
Class
R5 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
0.47%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.53%
|
9.27%
|
14.22%
|
19.39%
|
24.80%
|
30.45%
|
36.36%
|
42.54%
|
49.00%
|
55.75%
|
|
End
of Year Balance |
$10,453.00
|
$10,926.52
|
$11,421.49
|
$11,938.88
|
$12,479.71
|
$13,045.04
|
$13,635.98
|
$14,253.69
|
$14,899.38
|
$15,574.32
|
|
Estimated
Annual Expenses |
$48.06
|
$50.24
|
$52.52
|
$54.90
|
$57.38
|
$59.98
|
$62.70
|
$65.54
|
$68.51
|
$71.61
|
|
| ||||||||||
|
Class
R6 |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
Annual
Expense Ratio1
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
0.40%
|
|
Cumulative
Return Before Expenses |
5.00%
|
10.25%
|
15.76%
|
21.55%
|
27.63%
|
34.01%
|
40.71%
|
47.75%
|
55.14%
|
62.90%
|
|
Cumulative
Return After Expenses |
4.60%
|
9.41%
|
14.44%
|
19.70%
|
25.21%
|
30.97%
|
36.99%
|
43.29%
|
49.88%
|
56.77%
|
|
End
of Year Balance |
$10,460.00
|
$10,941.16
|
$11,444.45
|
$11,970.89
|
$12,521.55
|
$13,097.54
|
$13,700.03
|
$14,330.23
|
$14,989.42
|
$15,678.93
|
|
Estimated
Annual Expenses |
$40.92
|
$42.80
|
$44.77
|
$46.83
|
$48.98
|
$51.24
|
$53.60
|
$56.06
|
$58.64
|
$61.34
|
|
| ||||||||||
|
1
|
Your
actual expenses may be higher or lower than those shown. |
|
2
|
The
hypothetical assumes you hold your investment for a full 10 years. Therefore, any applicable deferred sales charge that might apply in
year one for Class C has not been deducted. |
14 Invesco
Short Term Bond Fund
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
Short Term Bond Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
STB-PRO-1
|
Prospectus
June
28, 2024
Invesco
SMA High Yield Bond Fund
Shares
of the Fund may be purchased and held by or on behalf of wrap fee, separately managed and other discretionary accounts (SMAs) for which
Invesco Advisers, Inc. (Invesco or the Adviser) or its affiliates have an agreement with a program sponsor or directly with the client,
to provide management or advisory services to the account.
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
An
investment in the Fund:
■
is
not FDIC insured;
■
may
lose value; and
■
is
not guaranteed by a bank.
Table of Contents
Invesco
SMA High Yield Bond Fund
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is total return through growth of capital and current income.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries, or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling shares of the Fund.
|
Shareholder
Fees (fees paid directly from your investment)
| |
|
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
None
|
|
| |
|
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase price or
redemption
proceeds, whichever is less) |
None
|
|
| |
|
Management
Fees1
|
None
|
|
| |
|
Distribution
and/or Service (12b-1) Fees |
None
|
|
| |
|
Other
Expenses |
1.04
|
|
| |
|
Total
Annual Fund Operating Expenses |
1.04
|
|
| |
|
Expense
Reimbursement2
|
1.03
|
|
| |
|
Total
Annual Fund Operating Expenses After Expense Reimbursement |
0.01
|
|
| |
|
1 |
Invesco Advisers,
Inc. (Invesco or the Adviser) will not charge a management fee for its advisory services to the Fund. Shareholders should be aware that
the Fund is an investment option for wrap fee, separately managed and other discretionary accounts for which Invesco or its affiliates
receive compensation pursuant to an investment management agreement. Invesco will be compensated directly or indirectly by clients or
account program sponsors (“Program Sponsors”) for managed account advisory services, including with respect to assets that
may be invested in the Fund. You should carefully read the account program brochure provided to you by Invesco or its affiliates, or the
Program Sponsor. The brochure is required to include information about the fees charged to you and, in the case of a wrap fee or separately
managed account program with a Program Sponsor, the fees paid by the Program Sponsor to Invesco.
|
|
2 |
Invesco has
contractually agreed to reimburse expenses necessary to limit Total Fund Operating Expenses After Expense Reimbursement (excluding certain
items discussed in the statement of additional information) of shares of the Fund to 0.00% of the Fund’s average daily net assets
(the “expense limit”). This expense reimbursement agreement will continue in effect for so long as Invesco serves as adviser
to the Fund. The expense reimbursement agreement cannot be terminated or amended to increase the expense limit without approval of the
Board of Trustees.
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
This
Example does not represent the effect of any fees or expenses paid at
the wrap fee, separately managed or other discretionary account level, and if it did, expenses would be higher.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses are subject to the contractual expense reimbursement shown above and remain
the same.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Invesco
SMA High Yield Bond Fund |
$1
|
$228
|
$474
|
$1,178
|
|
| ||||
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and
may result in higher
taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. During the period March 1, 2023 (commencement of operations) to February 29, 2024, the
Fund’s portfolio turnover rate was
123%
of the average value of its portfolio.
Principal
Investment Strategies of the Fund
The Fund invests,
under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in debt securities that are determined
to be below investment grade quality, and in derivatives and other instruments that have economic characteristics similar to such securities.
These types of securities are commonly referred to as junk bonds. Investment grade securities are: (i) securities rated BBB- or higher
by S&P Global Ratings (S&P) or Baa3 or higher by Moody’s Investors Service, Inc. (Moody’s) or an equivalent rating
by another nationally recognized statistical rating organization (NRSRO), (ii) securities with comparable short-term NRSRO ratings, or
(iii) unrated securities determined by Invesco Advisers, Inc. (Invesco or the Adviser) to be of comparable quality, each at the time of
purchase. If two or more NRSROs have assigned different ratings to a security, the Adviser uses the lowest rating assigned.
The
Fund will principally invest in junk bonds rated B- or above by an NRSRO
or, if unrated, deemed to be of comparable quality by the Adviser.
The
Fund may invest in preferred stocks and convertible securities, which
are securities that generally pay interest and may be converted into common stock.
The
Fund may invest up to 25% of its net assets in foreign securities. With
regard to foreign security holdings, up to 15% of the Fund’s net assets may be in securities of issuers located in emerging markets
countries, i.e., those that are generally in the early stages of their industrial cycles. The Fund may also invest in securities not considered
foreign securities that carry foreign credit exposure.
The
Fund may purchase mortgage-backed and asset-backed securities such
as collateralized mortgage obligations (CMOs), collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) of any
rating. The Fund may invest up to 15% of its net assets in illiquid or thinly traded investments. The Fund also may invest in securities
that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended.
The Fund may also purchase municipal securities. The Fund’s investments may include securities that do not produce immediate cash
income, such as zero coupon securities and payment-in-kind securities. The Fund may also invest, subject to an overall 15% limit, in loans,
in loan participations or assignments.
The
Fund may invest in securities of any maturity or duration.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
The
Fund can use swap contracts, including interest rate swaps, to seek
to hedge or adjust its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to gain or reduce
exposure to an asset class or a particular issue. The Fund can further use swap contracts, including credit default index swaps, to seek
to hedge credit risk or take a position on a basket of credit entities and to gain or reduce exposure to an asset class or a particular
issue; and use total return swaps to gain exposure to a reference asset.
The
Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage
interest rate risk; currency options to manage currency exposure; and options on bond or rate futures to manage interest rate exposure.
The
Fund can use futures contracts, including interest rate futures, to increase
or reduce its exposure to interest rate changes. The Fund can also use currency futures contracts and/or forward foreign currency contracts
to
1 Invesco
SMA High Yield Bond Fund
seek to hedge against
adverse movements in the foreign currencies in which portfolio securities are denominated.
In
selecting securities for the Fund’s portfolio, the Adviser focuses on securities
that it believes have favorable prospects for high current income and the possibility of growth of capital. The Adviser conducts a bottom-up
fundamental analysis of an issuer before its securities are purchased by the Fund. The fundamental analysis involves an evaluation by
a team of credit analysts of an issuer’s financial statements in order to assess its financial condition. The credit analysts also
assess the ability of an issuer to reduce its leverage (i.e., the amount of borrowed debt). The credit research process utilized by the
Fund to implement its investment strategy in pursuit of its investment objective considers factors that may include, but are not limited
to, an issuer’s operations, capital structure and environmental, social and governance (“ESG”) considerations. Credit
quality analysis for certain issuers therefore may consider whether any ESG factors pose a material financial risk or opportunity to an
issuer. The Adviser may determine that ESG considerations are not material to certain issuers or types of investments held by the Fund,
and not all issuers or Fund investments may undergo a credit quality analysis that considers ESG factors and ESG considerations may not
be applied to each issuer or Fund investment. Consideration of ESG factors is just one component of the portfolio managers’ assessment
of issuers eligible for investment and not necessarily determinative to an investment decision. Therefore, the Fund’s portfolio
managers may still invest in securities of issuers that may be viewed as having a high ESG risk profile.
The
bottom-up fundamental analysis is supplemented by an ongoing review
of the securities’ relative value compared with other junk bonds, and a top-down analysis of sector and macro-economic trends,
such as changes in interest rates.
The
portfolio managers attempt to control the Fund’s risk by limiting the portfolio’s
assets that are invested in any one security, and by diversifying the portfolio’s holdings over a number of different industries.
Although the Fund is actively managed, it is reviewed regularly against its style-specific benchmark index (the Bloomberg U.S. Corporate
High Yield Ba/B 2% Issuer Cap Index) to assess the portfolio’s relative risk and its positioning.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality, or general liquidity needs of the Fund.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. The risks associated with an investment in the Fund can increase during times of significant
market volatility. The principal risks of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters,
widespread
disease or other public health issues, war, military conflict, acts of terrorism, economic crisis or adverse investor sentiment generally.
During a general downturn in the financial markets, multiple asset classes may decline in value. When markets perform well, there can
be no assurance that specific investments held by the Fund will rise in value.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
Investments in high yield debt securities (junk bonds) and other lower-rated securities will subject the Fund to substantial risk of loss.
These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due,
are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield
debt securities tend to be very volatile.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments and share price may decline. Changes in central bank policies and other governmental actions and political events within the
U.S. and abroad may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Foreign
Securities Risk.
The Fund's foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies,
difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible
seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Foreign companies generally
may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting
controls, and may therefore be more susceptible to fraud or corruption. There may be less public information available about foreign companies
than U.S. companies, making it difficult to evaluate those foreign companies. Unless the Fund has hedged its foreign currency exposure,
foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of
2 Invesco
SMA High Yield Bond Fund
securities
denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value.
Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertain trading markets and more governmental limitations on foreign investment than more developed markets. In addition,
companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed
markets. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable
to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information,
including financial information, about such companies may be less available and reliable, which can impede the Fund's’s ability
to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly
and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization
of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country,
protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be
limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market
countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays
in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities and such securities may be difficult to value and may have significant
volatility.
Rule
144A Securities and Other Exempt Securities Risk. The market
for Rule 144A and other securities exempt from certain registration requirements may be less active than the market for publicly-traded
securities. Rule 144A and other exempt securities, while initially privately placed, carry the risk that their liquidity may become impaired
and the Fund may be unable to dispose of the securities at a desirable time or price.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also
may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many
other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
Convertible
Securities Risk. The
market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal
payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible
security is subject to the same types of market and issuer risks that apply to the underlying common stock. In addition, certain convertible
securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events,
and, as a result, are subject to an increased risk of loss. Convertible
securities
may be rated below investment grade and therefore considered to have more speculative characteristics and greater susceptibility to default
or decline in market value than investment grade securities.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject
to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than expected due to changes
in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby
reducing the Fund's income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected
rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of
mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities
may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
During periods of market stress or high redemptions, the Fund may be forced to sell these securities at significantly reduced prices,
resulting in losses. Liquid privately-issued mortgage-backed securities and asset-backed securities can become illiquid during periods
of market stress. Privately-issued mortgage-related securities are not subject to the same underwriting requirements as those with government
or government-sponsored entity guarantees and, therefore, mortgage loans underlying privately-issued mortgage-related securities may have
less favorable collateral, credit risk, liquidity risk or other underwriting characteristics, and wider variances in interest rate, term,
size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages, which are loans made
to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity risk
is even greater for mortgage pools that include subprime mortgages.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. Liquid securities can become illiquid during periods of market stress. If a significant amount of the Fund’s
securities become illiquid, the Fund may not be able to timely pay redemption proceeds and may need to sell securities at significantly
reduced prices.
Derivatives
Risk.
The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty
risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise
perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic
exposure created by holding a position in the derivative. As a result, an adverse change in the value of the underlying asset could result
in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative or the anticipated value of the
underlying asset, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments
3 Invesco
SMA High Yield Bond Fund
may
also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable
time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its
derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could
impact the Fund’s ability to use certain derivatives or their cost. Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly
during adverse market conditions.
Municipal
Securities Risk. The
risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a
decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate
the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status
of municipal securities.
Zero
Coupon or Pay-In-Kind Securities Risk.
The value, interest rates, and liquidity of non-cash paying instruments, such as zero coupon and pay-in-kind securities, are subject to
greater fluctuation than other types of securities. The higher yields and interest rates on pay-in-kind securities reflect the payment
deferral and increased credit risk associated with such instruments and that such investments may represent a higher credit risk than
loans that periodically pay interest.
Senior
Loans and Other Loans Risk. Risks associated with an investment
in Senior Loans include credit risk, interest rate risk, liquidity risk, valuation risk and prepayment risk. These risks are typically
associated with debt securities but may be heightened in part because of the limited public information regarding Senior Loans. Senior
Loans generally are floating rate loans, which are subject to interest rate risk as the interest paid on the floating rate loans adjusts
periodically based on changes in widely accepted reference rates. Lack of an active trading market, restrictions on resale, irregular
trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to sell Senior 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. The risk of holding Senior Loans is also directly
tied to the risk of insolvency or bankruptcy of the issuing banks. The value of Senior Loans can be affected by and sensitive to changes
in government regulation and to economic downturns in the United States and abroad. Senior loans are also subject to the risk that a court
could subordinate a senior loan or take other action detrimental to the holders of senior loans. Loans are subject to the risk that the
value of the collateral, if any, securing a loan may decline, be insufficient to meet the obligations of the borrower, or be difficult
to liquidate. Loan investments are often issued in connection with highly leveraged transactions which are subject to greater credit risks
than other investments including a greater possibility that the borrower may default or enter bankruptcy. Highly leveraged loans also
may be less liquid than other loans. These risks could cause the Fund to lose income or principal on a particular investment, which in
turn could affect the Fund’s returns. Newly originated loans (including reissuances and restructured loans) may possess lower levels
of credit document protections than has historically been the case. Accordingly, in the event of default the Fund may experience lower
levels of recoveries than has historically been the norm.
Risk
of Investing in Loans. Investments in loans are subject to
interest rate risk and credit risk. Default in the payment of interest or
principal
on a loan will result in a reduction in its value. Although the loans in which the Fund may invest generally are secured by specific collateral,
there can be no assurance that such collateral will satisfy the borrower’s obligation in the event of non payment of scheduled
interest or principal or that such collateral could be readily liquidated. In the event of the bankruptcy of a borrower, access to the
collateral may be limited by bankruptcy or other insolvency loans. The Fund may also invest in loans that are not secured by collateral.
Unsecured loans involve additional risk because the lenders are general unsecured creditors of the borrower and any secured creditors
may have prior rights of recourse to the assets of the borrower, and the assets of the borrower may be insufficient to satisfy in full
all obligations owed to its creditors.
There
is no organized exchange on which loans are traded and reliable market
quotations may not be readily available. Therefore, elements of judgment may play a greater role in valuation of loans than for securities
with a more developed secondary market. To the extent that a secondary market does exist for certain loans, the market may be subject
to volatility, irregular trading activity, wide bid/ask spreads, decreased liquidity and extended trade settlement periods, any of which
may impair the ability to sell loans within a desired time frame or at an acceptable price. Extended trade settlement periods for certain
loans may result in cash not being immediately available upon sale of the loan. Some loans are subject to the risk that a court, pursuant
to fraudulent conveyance or other similar laws, could subordinate the loans to presently existing or future indebtedness of the borrower
or take other action detrimental to lenders, such as invalidation of loans or causing interest previously paid to be refunded to the borrower.
Investments in loans also are subject to the risk of changes in legislation or state or federal regulations. If such legislation or regulations
impose additional requirements or restrictions on the ability of financial institutions to make loans, the availability of loans for investment
may be adversely affected. Many loans are not registered with the SEC or any state securities commission and often are not rated by any
nationally recognized rating service. Generally, there is less readily available, reliable information about most loans than is the case
for many other types of securities. Although a loan may be senior to equity and other debt securities in a borrower’s capital structure,
such obligations may be structurally subordinated to obligations of the borrower’s subsidiaries.
Risks
of Loan Assignments and Participations. As the purchaser
of an assignment, the Fund typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under
the credit agreement with respect to the debt obligation; however, the Fund may not be able to unilaterally enforce all rights and remedies
under the loan and with regard to any associated collateral. Because assignments may be arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired by the Fund as the purchaser of an assignment may differ
from, and be more limited than, those held by the assigning lender. In addition, if the loan is foreclosed, the Fund could become part
owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. The Fund may be required to
pass along to a purchaser that buys a loan from the Fund by way of assignment, a portion of any fees to which the Fund is entitled under
the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with
the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Fund may not directly benefit
from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund will be subject to the credit
risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation,
the Fund may be treated as a general creditor of the lender and may not benefit from any setoff between the lender and the borrower.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
4 Invesco
SMA High Yield Bond Fund
of
its investment objective may vary across types of eligible investments and issuers, and not every ESG factor may be identified or evaluated
for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s portfolio will not
be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused issuers.
The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended.
The Fund may underperform other funds that do not assess an issuer’s ESG factors or that use a different methodology to identify
and/or incorporate ESG factors. Information used by the Fund to evaluate such factors may not be readily available, complete or accurate,
and may vary across providers and issuers as ESG is not a uniformly defined characteristic. There is no guarantee that the evaluation
of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in added
expenses, a lower return and
increased tax liability.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
No
performance information is available for the Fund because it has not yet completed a full calendar year of operations.
In the future, the Fund will disclose performance information
in a bar chart and performance table. Such disclosure will give some indication of the risks of an investment in the Fund by comparing
the Fund’s performance with a broad measure of market performance and an additional index with characteristics similar to the Fund,
along with showing changes in the Fund’s performance from year to year.
Past
performance (before and after taxes) is not necessarily an indication of its future performance. In addition, performance
does not reflect the fees and expenses paid by participants at the wrap fee, separately managed or other discretionary account level.
You should evaluate the performance of the Fund in the context of your managed account program.
Management
of the Fund
Investment Adviser:
Invesco Advisers, Inc. (Invesco or the Adviser)
|
Portfolio
Managers |
Title
|
Length
of Service on the Fund |
|
Niklas
Nordenfelt, CFA |
Portfolio
Manager (lead) |
2023
|
|
| ||
|
Rahim
Shad |
Portfolio
Manager |
2023
|
|
| ||
|
Philip
Susser |
Portfolio
Manager |
2023
|
|
| ||
Purchase
and Sale of Fund Shares
Shares
of the Fund may be purchased and redeemed by or on behalf of wrap fee, separately managed or other discretionary accounts where the Adviser
or its affiliates has an agreement with the Program Sponsor or directly with the client, to provide management or advisory services to
the managed account.
The
minimum investments for Fund accounts are as follows*:
|
Initial
Investment Per Fund Account |
$1,000
|
|
| |
|
Additional
Investments Per Fund Account |
No
minimum |
|
| |
* Your Program Sponsor
may have certain investment requirements.
Purchase
and redemption orders generally are made based on instructions
from the Adviser or Program Sponsor to the broker-dealer who executes trades for the account. Shares of the Fund can be purchased or redeemed
through the broker-dealer on any day the NYSE is open.
Tax
Information
The Fund’s
distributions generally are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement, such as
a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed when withdrawn from such plan or account.
Objective(s)
and Strategies
The Fund’s
investment objective is total return through growth of capital and current income. The Fund’s investment objective may be changed
by the Board of Trustees (the Board) without shareholder approval.
The
Fund invests, under normal circumstances, at least 80% of its net assets
(plus any borrowings for investment purposes) in debt securities that are determined to be below investment grade quality, and in derivatives
and other instruments that have economic characteristics similar to such securities. These types of securities are commonly referred to
as junk bonds. Investment grade securities are: (i) securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s or
an equivalent rating by another NRSRO, (ii) securities with comparable short-term NRSRO ratings, or (iii) unrated securities determined
by the Adviser to be of comparable quality, each at the time of purchase. If two or more NRSROs have assigned different ratings to a security,
the Adviser uses the lowest rating assigned.
The
Fund will principally invest in junk bonds rated B or above by an NRSRO
or, if unrated, deemed to be of comparable quality by the Adviser. The Fund may invest up to 10% of its net assets in bonds rated CCC
or lower by an NRSRO or, if unrated, deemed to be of comparable quality by the Adviser, including distressed and/or defaulted securities.
The
Fund may invest in preferred stocks and convertible securities, which
are securities that generally pay interest and may be converted into common stock.
The
Fund may invest up to 25% of its net assets in foreign securities. With
regard to foreign security holdings, up to 15% of the Fund’s net assets may be in securities of issuers located in emerging markets
countries, i.e., those that are generally in the early stages of their industrial cycles. The Fund may also invest in securities not considered
foreign securities that carry foreign credit exposure.
The
Fund may purchase mortgage-backed and asset-backed securities such
as CMOs, CLOs and CDOs of any rating. The Fund may invest up to 15% of its net assets in illiquid or thinly traded investments. The Fund
also may invest in securities that are subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities
Act of 1933, as amended. The Fund may also purchase municipal securities. The Fund’s investments may include securities that do
not produce immediate cash income, such as zero coupon securities and payment-in-kind securities. Zero coupon securities are debt securities
that do not entitle the holder to any periodic payment of interest prior to maturity or a specified date when the securities begin paying
current interest. Payment-in-kind securities are debt securities that pay interest through the issuance of additional securities. The
Fund may also invest, subject to an overall 15% limit, in loans, in loan participations or assignments.
The
Fund may invest in securities of any maturity and duration. Maturity is
the date at which the security’s issuer legally agrees to repay the principal. The average maturity of securities in the Fund’s
portfolio will fluctuate based on the portfolio managers’ view of economic, market and political conditions. Duration is a measure
of volatility expressed in years and represents the anticipated percent change in a bond’s price at a single point in time for
a 1% change in yield. As duration increases, volatility increases as applicable interest rates change. For example, the value of a
5 Invesco
SMA High Yield Bond Fund
fixed income security
with a duration of five years would be expected to decrease by 5% for every 1% increase in interest rates.
The
Fund can invest in derivative instruments, including swap contracts, options,
futures contracts and forward foreign currency contracts.
A
swap contract is an agreement between two parties pursuant to which
the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference
to specified securities, indexes, reference rates, commodities, currencies or other assets. The notional amount of a swap is based on
the nominal or face amount of a reference asset that is used to calculate payments made on that swap; the notional amount typically is
not exchanged between counterparties. The parties to the swap use variations in the value of the underlying asset to calculate payments
between them through the life of the swap. The Fund can use swap contracts, including interest rate swaps, to seek to hedge or adjust
its exposure to interest rates. The Fund can also use swap contracts, including credit default swaps, to gain or reduce exposure to an
asset class or a particular issue. The Fund can further use swap contracts, including credit default index swaps, to seek to hedge credit
risk or take a position on a basket of credit entities and to gain or reduce exposure to an asset class or a particular issue; and total
return swaps to gain exposure to a reference asset.
An
option is a derivative financial instrument that reflects a contract between
two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation,
to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option
derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or
a futures contract) plus a premium based on the time remaining until the expiration of the option. Other types of options exist, and options
can in principle be created for any type of valuable asset. The Fund can use options, including credit default swap options, to gain the
right to enter into a credit default swap at a specified future date. The Fund can further use swaptions (options on swaps) to manage
interest rate risk; currency options to manage currency exposure; and options on bond or rate futures to manage interest rate exposure.
A
futures contract is a standardized agreement between two parties to buy
or sell a specified quantity of an underlying asset at a specified price at a specified future time. The value of a futures contract tends
to increase and decrease in tandem with the value of the underlying asset. Futures contracts are bilateral agreements, with both the purchaser
and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are
settled by purchasing an offsetting contract, physically delivering the underlying instrument on the settlement date or paying a cash
settlement amount on the settlement date. The Fund can use futures contracts, including interest rate futures, to increase or reduce its
exposure to interest rate changes. The Fund can also use currency futures contracts to seek to hedge against adverse movements in the
foreign currencies in which portfolio securities are denominated.
A
forward foreign currency contract is an agreement between parties to exchange
a specified amount of currency at a specified future time at a specified rate. The Fund can use forward foreign currency contracts to
hedge against adverse movements in the foreign currencies in which portfolio securities are denominated; though the Fund has not historically
used these instruments.
In
selecting securities for the Fund’s portfolio, the Adviser focuses on securities
that it believes have favorable prospects for high current income and the possibility of growth of capital. The Adviser conducts a bottom-up
fundamental analysis of an issuer before its securities are purchased by the Fund. The fundamental analysis involves an evaluation by
a team of credit analysts of an issuer’s financial statements in order to assess its financial condition. The credit analysts also
assess the ability of an issuer to reduce its leverage (i.e., the amount of borrowed debt). The credit research process utilized by the
Fund to implement its investment strategy in pursuit of its
investment objective
considers factors that may include, but are not limited to, an issuer’s operations, capital structure and environmental, social
and governance (“ESG”) considerations. Credit quality analysis for certain issuers therefore may consider whether any ESG
factors pose a material financial risk or opportunity to an issuer. The Adviser may determine that ESG considerations are not material
to certain issuers or types of investments held by the Fund, and not all issuers or Fund investments may undergo a credit quality analysis
that considers ESG factors and ESG considerations may not be applied to each issuer or Fund investment. Consideration of ESG factors is
just one component of the portfolio managers’ assessment of issuers eligible for investment and not necessarily determinative to
an investment decision. Therefore, the Fund’s portfolio managers may still invest in securities of issuers that may be viewed as
having a high ESG risk profile.
The
bottom-up fundamental analysis is supplemented by an ongoing review
of the securities’ relative value compared with other junk bonds, and a top-down analysis of sector and macro-economic trends,
such as changes in interest rates.
The
portfolio managers attempt to control the Fund’s risk by limiting the portfolio’s
assets that are invested in any one security, and by diversifying the portfolio’s holdings over a number of different industries.
Although the Fund is actively managed, it is reviewed regularly against its style-specific benchmark index (the Bloomberg U.S. Corporate
High Yield Ba/B 2% Issuer Cap Index) to assess the portfolio’s relative risk and its positioning.
Decisions
to purchase or sell securities are determined by the relative value
considerations of the portfolio managers that factor in economic and credit-related fundamentals, market supply and demand, market dislocations
and situation-specific opportunities. The purchase or sale of securities may be related to a decision to alter the Fund’s macro
risk exposure (such as duration, yield curve positioning and sector exposure), a need to limit or reduce the Fund’s exposure to
a particular security or issuer, degradation of an issuer’s credit quality, or general liquidity needs of the Fund.
In
attempting to meet its investment objective or to manage subscription
and redemption requests, the Fund may engage in active and frequent trading of portfolio securities.
In
anticipation of or in response to market, economic, political, or other conditions,
the Fund’s portfolio managers may temporarily use a different investment strategy for defensive purposes. If the Fund’s
portfolio managers do so, different factors could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Fund and Its Investments and
Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a
whole. The value of the Fund’s investments may go up or down due to general market conditions that are not specifically related
to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate
earnings, changes in interest or currency rates, regional or global instability, or adverse investor sentiment generally. The value of
the Fund’s investments may also go up or down due to factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs and competitive conditions within an industry. In addition, natural or environmental disasters, widespread
disease or other
6 Invesco
SMA High Yield Bond Fund
public health issues,
war, military conflict, acts of terrorism, economic crisis or other events may have a significant impact on the value of the Fund’s
investments, as well as the financial markets and global economy generally. Such circumstances may also impact the ability of the Adviser
to effectively implement the Fund’s investment strategy. During a general downturn in the financial markets, multiple asset classes
may decline in value. When markets perform well, there can be no assurance that specific investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
High
Yield Debt Securities (Junk Bond/Below-Investment
Grade) Risk.
The Fund’s investments in high yield debt securities (commonly referred to as junk bonds) and other lower-rated securities will
subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability
to pay interest and principal when due and are more susceptible to default or decline in market value due to adverse economic, regulatory,
political or company developments than higher rated or investment grade securities. Prices of high yield debt securities tend to be very
volatile. These securities are less liquid than investment grade debt securities and may be difficult to sell at a desirable time or price,
particularly in times of negative sentiment toward high yield securities.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility
and
reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes
in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S. government’s
inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing financial or economic
conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s debt limit
may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including in the U.S.
government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund, including its
operations, universe of potential investment options, and return potential, and could also result in higher than normal redemptions by
shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs and potentially lower the
Fund’s performance returns.
Foreign
Securities Risk.
The value of the Fund's foreign investments may be adversely affected by political and social instability in the home countries of the
issuers of the investments, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations
in those countries. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer
or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be subject to less stringent regulations than U.S. companies,
including financial reporting requirements and auditing and accounting controls, and may therefore be more susceptible to fraud or corruption.
Also, there may be less publicly available information about companies in certain foreign countries than about U.S. companies making it
more difficult for the Adviser to evaluate those companies. The laws of certain countries may put limits on the Fund’s ability
to recover its assets held at a foreign bank if the foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt.
Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Changes in political and economic factors in one country or region could adversely affect conditions in another country or region. Investments
in foreign securities may also expose the Fund to time-zone arbitrage risk. At times, the Fund may emphasize investments in a particular
country or region and may be subject to greater risks from adverse events that occur in that country or region. Unless the Fund has hedged
its foreign currency exposure, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may
cause the value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign
currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies,
if used, are not always successful. For instance, currency forward contracts, if used by the Fund, could reduce performance if there are
unanticipated changes in currency exchange rates.
Emerging
Market Securities Risk.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic
instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more
developed markets. In addition, companies operating in emerging markets may have greater concentration in a few industries resulting in
greater vulnerability to regional and global trade conditions and also may be subject to lower trading volume and greater price fluctuations
than companies in more developed markets. Unexpected market closures may also affect investments in emerging markets. Settlement procedures
may differ from those of more established securities markets, and settlement delays may result in the inability to invest assets or dispose
of portfolio securities in a timely manner. As a result there could be subsequent declines in value of the portfolio security, a decrease
in the level of liquidity of the portfolio, or, if there is a contract to sell the security, a possible liability to the purchaser.
7 Invesco
SMA High Yield Bond Fund
Such
countries’ economies may be more dependent on relatively few industries
or investors that may be highly vulnerable to local and global changes. Emerging market countries may also have higher rates of inflation
or deflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity to interest rate changes. Further, companies
in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature and quality of such information may
vary. Information about such companies may be less available and reliable and, therefore, the ability to conduct adequate due diligence
in emerging markets may be limited which can impede the Fund's’s ability to evaluate such companies. In addition, certain emerging
market countries may impose material limitations on Public Company Accounting Oversight Board (“PCAOB”) inspection,
investigation and enforcement capabilities, which can hinder the PCAOB’s ability to engage in independent oversight or inspection
of accounting firms located in or operating in certain emerging markets. There is no guarantee that the quality of financial reporting
or the audits conducted by audit firms of emerging market issuers meet PCAOB standards.
Securities
law in many emerging market countries is relatively new and unsettled.
Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder
rights may change quickly and unpredictably. Emerging market countries also may have less developed legal systems allowing for enforcement
of private property rights and/or redress for injuries to private property (including bankruptcy, confiscatory taxation, expropriation,
nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets
from the country, protectionist measures and practices such as share blocking). Certain governments may require approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign investors. The ability to bring and enforce actions in
emerging market countries, or to obtain information needed to pursue or enforce such actions, may be limited and shareholder claims may
be difficult or impossible to pursue. In addition, the taxation systems at the federal, regional and local levels in emerging market countries
may be less transparent and inconsistently enforced, and subject to sudden change.
Emerging
market countries may have a higher degree of corruption and fraud
than developed market countries, as well as counterparties and financial institutions with less financial sophistication, creditworthiness
and/or resources. The governments in some emerging market countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. However, in certain emerging market countries, the ability of foreign entities to participate
in privatization programs may be limited by local law. There can be no assurance that privatization programs will be successful.
Other
risks of investing in emerging market securities may include additional
transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Foreign
Credit Exposure Risk.
U.S. dollar-denominated securities carrying foreign credit exposure may be affected by unfavorable political, economic or governmental
developments that could affect payments of principal and interest.
Restricted
Securities Risk.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, and may prevent the Fund from disposing
of them promptly at reasonable prices. There can be no assurance that a trading market will exist at any time for any particular restricted
security. Transaction costs may be higher for restricted securities. Also, restricted securities may be difficult to value because market
quotations may not be readily available, and the securities may have significant volatility. In addition, the Fund may get only limited
information about the issuer of a restricted security and therefore may be less able to predict a loss.
Rule
144A Securities and Other Exempt Securities Risk. The Fund
may invest in Rule 144A securities and other types of exempt
securities,
which are not registered for sale pursuant to an exemption from registration under the Securities Act of 1933, as amended. These securities,
while initially privately placed, typically may be resold
only to qualified institutional buyers, or in a privately negotiated transaction, or to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of time and other conditions are met for an exemption from registration. If
there are an insufficient number of qualified institutional buyers interested in purchasing such securities at a particular time, the
Fund may have difficulty selling such securities at a desirable time or price. As a result, the Fund’s investment in such securities
may be subject to increased liquidity risk. In addition, the issuers of Rule 144A securities may require their qualified institutional
buyers (such as the Fund) to keep certain offering information confidential, which could adversely affect the ability of the Fund to sell
such securities.
Distressed
Debt Securities Risk. The Fund may invest in debt securities
issued by companies that are involved in reorganizations, financial restructurings or bankruptcy. Such distressed debt securities are
speculative and involve substantial risks in addition to the risks of investing in below-investment-grade debt securities. The Fund will
generally not receive interest payments on the distressed securities and may also incur costs to protect its investment. In addition,
distressed securities involve the substantial risk that principal will not be repaid. These securities may present a substantial risk
of default or may be in default at the time of investment. The Fund may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal of or interest on its portfolio holdings. In any reorganization or liquidation proceeding
relating to a portfolio company, the Fund may lose its entire investment or may be required to accept cash or securities with a value
less than its original investment. Distressed securities and any securities received in an exchange for such securities may be subject
to restrictions on resale.
Defaulted
Securities Risk.
Defaulted securities pose a greater risk that principal will not be repaid than non-defaulted securities. The Fund will generally not
receive interest payments on defaulted securities and may incur costs to protect its investment. Defaulted securities and any securities
received in an exchange for such securities may be subject to restrictions on resale. Investments in defaulted securities and obligations
of distressed issuers are considered speculative and the prices of these securities may be more volatile than non-defaulted securities.
Preferred
Securities Risk.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred stock has a
set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in
a liquidation or bankruptcy. Preferred securities also may be subordinated to bonds or other debt instruments in an issuer’s capital
structure, subjecting them to a greater risk of non-payment than these more senior securities. For this reason, the value of preferred
securities will usually react more strongly than bonds and other debt securities to actual or perceived changes in the company’s
financial condition or prospects. Preferred securities may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Convertible
Securities Risk.
The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the
value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be
able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or
the market’s perception of the issuer’s creditworthiness. Convertible securities can be converted into or exchanged for
a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible
debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed.
Some convertible debt securities may be considered “equity
8 Invesco
SMA High Yield Bond Fund
equivalents”
because of the feature that makes them convertible into common stock. Since a convertible security derives a portion of its value from
the common stock into which it may be converted, a convertible security is also subject to the same types of market and issuer risks that
apply to the underlying common stock. In addition, certain convertible securities are subject to involuntary conversions and may undergo
principal write-downs upon the occurrence of certain triggering events. These convertible securities are subject to an increased risk
of loss and are generally subordinate in rank to other debt obligations of the issuer. Convertible securities may be rated below investment
grade and therefore considered to have more speculative characteristics and greater susceptibility to default or decline in market value
than investment grade securities.
Collateralized
Loan Obligations Risk.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods
of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market
anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in
CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorb losses from the defaults
before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
Mortgage-
and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, differ from
conventional debt securities because principal is paid back over the life of the security rather than at maturity. Mortgage- and asset-backed
securities are subject to prepayment or call risk, which is the risk that a borrower's payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a
result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund's income. Mortgage- and asset-backed
securities also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the
life of the mortgage- and asset-backed securities, causing the price of the mortgage- and asset-backed securities and the Fund’s
share price to fall and would make the mortgage- and asset-backed securities more sensitive to interest rate changes. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool will adversely affect the value of mortgage-backed securities and will
result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types
of securities and the Fund may be unable to sell these securities at the time or price it desires. During periods of market stress or
high redemptions, the Fund may be forced to sell these securities at significantly reduced prices, resulting in losses. Liquid privately-issued
mortgage-backed securities and asset-backed securities can become illiquid during periods of market stress. Privately-issued mortgage-related
securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related
securities that have government or government-sponsored entity guarantees. As a result, the mortgage loans underlying privately-issued
mortgage-related securities may, and frequently do, have less favorable collateral, credit risk, liquidity risk or other underwriting
characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including
interest rate, term, size, purpose and borrower characteristics. The Fund may invest in mortgage pools that include subprime mortgages,
which are loans made to borrowers with weakened credit histories or with lower capacity to make timely payments on their mortgages. Liquidity
risk is even greater for mortgage pools that include subprime mortgages.
Liquidity
Risk.
The Fund may be unable to sell illiquid investments at the time or price it desires and, as a result, could lose its entire investment
in such investments. An investment may be illiquid due to a lack of trading
volume in the investment
or if the investment is privately placed and not traded in any public market or is otherwise restricted from trading. Liquid securities
can become illiquid during periods of market stress. If a significant amount of the Fund’s securities become illiquid, the Fund
may not be able to timely pay redemption proceeds and may need to sell securities at significantly reduced prices.
Derivatives
Risk.
A derivative is an instrument whose value depends largely on (and is derived from) the value of an underlying security, currency, commodity,
interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets,
the use of derivatives may include other, possibly greater, risks, which are described below.
■
Counterparty
Risk.
Certain derivatives do not trade on an established exchange (referred to as over-the-counter (OTC) derivatives) and are simply financial
contracts between the Fund and a counterparty. When the Fund is owed money on an OTC derivative, the Fund is dependent on the counterparty
to pay or, in some cases, deliver the underlying asset, unless the Fund can otherwise sell its derivative contract to a third party prior
to its expiration. Many counterparties are financial institutions such as banks and broker-dealers and their creditworthiness (and ability
to pay or perform) may be negatively impacted by factors affecting financial institutions generally. In addition, in the event that a
counterparty becomes bankrupt or insolvent, the Fund’s ability to recover the collateral that the Fund has on deposit with the
counterparty could be delayed or impaired. For derivatives traded on a centralized exchange, the Fund generally is dependent upon the
solvency of the relevant exchange clearing house (which acts as a guarantor for each contractual obligation under such derivatives) for
payment on derivative instruments for which the Fund is owed money.
■
Leverage
Risk.
Many derivatives do not require a payment up front equal to the economic exposure created by holding a position in the derivative, which
creates a form of leverage. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a
loss that is substantially greater than the amount invested in the derivative or the anticipated value of the underlying asset. In addition,
some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment. Leverage may therefore
make the Fund’s returns more volatile and increase the risk of loss. In certain market conditions, losses on derivative instruments
can grow larger while the value of the Fund’s other assets fall, resulting in the Fund’s derivative positions becoming a
larger percentage of the Fund’s investments.
■
Liquidity
Risk.
There is a smaller pool of buyers and sellers for certain derivatives, particularly OTC derivatives, than more traditional investments
such as stocks. These buyers and sellers are often financial institutions that may be unable or unwilling to buy or sell derivatives during
times of financial or market stress. Derivative instruments may therefore be less liquid than more traditional investments and the Fund
may be unable to sell or exit its derivative positions at a desirable time or price. This risk may be more acute under adverse market
conditions, during which the Fund may be most in need of liquidating its derivative positions. To the extent that the Fund is unable to
exit a derivative position because of market illiquidity, the Fund may not be able to prevent further losses of value in its derivatives
holdings and the liquidity of the Fund and its ability to meet redemption requests may be impaired to the extent that a substantial portion
of the Fund’s otherwise liquid assets must be used as margin. Another consequence of illiquidity is that the Fund may be required
to hold a derivative instrument to maturity and take or make delivery of the underlying asset that the Adviser would otherwise avoid.
■
Forward
Foreign Currency Contracts Risk. Forward foreign currency
contracts are used to lock in the U.S. dollar price of a
9 Invesco
SMA High Yield Bond Fund
security
denominated in a foreign currency or protect against possible losses from changes in the relative value of the U.S. dollar against a foreign
currency. They are subject to the risk that anticipated currency movements will not be accurately predicted or do not correspond accurately
to changes in the value of the fund's holdings, which could result in losses and additional transaction costs. The use of forward contracts
could reduce performance if there are unanticipated changes in currency prices. A contract to sell a foreign currency would limit any
potential gain that might be realized if the value of the currency increases. A forward foreign currency contract may also result in losses
in the event of a default or bankruptcy of the counterparty.
■
Futures
Contracts Risk. The volatility of futures contracts prices
has been historically greater than the volatility of stocks and bonds. The liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures
contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible
price movement.
■
Options
Risk. If the Fund sells a put option, there is a risk that
the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is a risk
that the Fund may be required to sell the underlying investment at a disadvantageous price. If the Fund sells a call option on an investment
that the Fund owns (a “covered call”) and the investment has increased in value when the option is exercised, the Fund will
be required to sell the investment at the call price and will not be able to realize any of the investment’s value above the call
price. Options may involve economic leverage, which could result in greater price volatility than other investments.
■
Swap
Transactions Risk. Under U.S. financial reform legislation
enacted in 2010, certain types of swaps are required to be executed on a regulated market and cleared through a central clearing house
counterparty, which may entail further risks and costs for the Fund. Swap agreements are privately negotiated in the over-the-counter
market and may be entered into as a bilateral contract or may be centrally cleared. In a centrally cleared swap, immediately following
execution of the swap agreement, the swap agreement is submitted for clearing to a central clearing house counterparty, and the Fund faces
the central clearing house counterparty by means of an account with a futures commission merchant that is a member of the clearing house.
■
Other
Risks.
Compared to other types of investments, derivatives may be harder to value and may also be less tax efficient, as described under the
“Taxes” section of the prospectus. In addition, changes in government regulation of derivative instruments could affect
the character, timing and amount of the Fund’s taxable income or gains, and may limit or prevent the Fund from using certain types
of derivative instruments as a part of its investment strategy, which could make the investment strategy more costly to implement or require
the Fund to change its investment strategy. Derivatives strategies may not always be successful. For example, to the extent that
the Fund uses derivatives for hedging or to gain or limit exposure to a particular market or market segment, there may be imperfect correlation
between the value of the derivative instrument and the value of the instrument being hedged or the relevant market or market segment,
in which case the Fund may not realize the intended benefits. There is also the risk that during adverse market conditions, an instrument
which would usually operate as a hedge provides no
hedging
benefits at all. The Fund’s use of derivatives may be limited by the requirements for taxation of the Fund as a regulated investment
company.
Municipal
Securities Risk.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative
enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may
affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security.
Municipal obligations may be more susceptible to downgrades or defaults during recessions or similar periods of economic stress. Municipal
securities structured as revenue bonds are generally not backed by the taxing power of the issuing municipality but rather the revenue
from the particular project or entity for which the bonds were issued. If the Internal Revenue Service determines that an issuer of a
municipal security has not complied with applicable tax requirements, interest from the security could be treated as taxable, which could
result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that
reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal
or state tax status of municipal securities.
Zero
Coupon or Pay-In-Kind Securities Risk.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and less liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular interest payment periods. Prices on non-cash-paying instruments
may be more sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances
than cash-paying securities with similar credit ratings, and thus may be more speculative. Investors may purchase zero coupon and pay-in-kind
securities at a price below the amount payable at maturity. Because such securities do not entitle the holder to any periodic payments
of interest prior to maturity, this prevents any reinvestment of interest payments at prevailing interest rates if prevailing interest
rates rise. The higher yields and interest rates on pay-in-kind securities reflect the payment deferral and increased credit risk associated
with such instruments and that such investments may represent a higher credit risk than coupon loans. Pay-in-kind securities may have
a potential variability in valuations because their continuing accruals require continuing judgments about the collectability of the deferred
payments and the value of any associated collateral. Special tax considerations are associated with investing in certain lower-grade securities,
such as zero coupon or pay-in-kind securities.
Senior
Loans and Other Loans Risk. There are a number of risks associated
with an investment in Senior Loans including credit risk, interest rate risk, liquidity risk, valuation risk and prepayment risk. These
risks are typically associated with debt securities but may be heightened in part because of the limited public information regarding
Senior Loans. Senior Loans generally are floating rate loans, which are subject to interest rate risk as the interest paid on the floating
rate loans adjusts periodically based on changes in widely accepted reference rates. Lack of an active trading market, restrictions on
resale, irregular trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to
sell Senior 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. The risk of holding Senior Loans
is also directly tied to the risk of insolvency or bankruptcy of the issuing banks. The value of Senior Loans can be affected by, and
is sensitive to, changes in government regulation and to economic downturns in the United States and abroad. These risks could cause the
Fund to lose income or principal on a particular investment, which in turn could affect the Fund’s returns. Newly originated loans
(including reissuances and restructured loans) may possess lower levels of credit document protections than has historically been the
case. Accordingly, in the
10 Invesco
SMA High Yield Bond Fund
event
of default the Fund may experience lower levels of recoveries than has historically been the norm.
In
addition to the risks typically associated with debt securities, senior loans
are also subject to the risk that a court could subordinate a senior loan, which typically holds a senior position in the capital structure
of a borrower, to presently existing or future indebtedness or take other action detrimental to the holders of senior loans. Loans usually
have mandatory and optional prepayment provisions. If a borrower prepays a loan, the Fund will have to reinvest the proceeds in other
loans or financial assets that may pay lower rates of return.
Loans
are subject to the risk that the value of the collateral, if any, securing
a loan may decline, be insufficient to meet the obligations of the borrower, or be difficult to liquidate. In the event of a default,
the Fund may have difficulty collecting on any collateral and would not have the ability to collect on any collateral for an uncollateralized
loan. In addition, the lenders’ security interest or their enforcement of their security under the loan agreement may be found
by a court to be invalid or the collateral may be used to pay other outstanding obligations of the borrower. The Fund’s access
to collateral, if any, may be limited by bankruptcy, other insolvency laws, or by the type of loan the Fund has purchased. As a result,
a collateralized loan may not be fully collateralized and can decline significantly in value.
Loan
investments are often issued in connection with highly leveraged transactions.
Such transactions include leveraged buyout loans, leveraged recapitalization loans, and other types of acquisition financing. These obligations
are subject to greater credit risks than other investments including a greater possibility that the borrower may default or enter bankruptcy.
Highly leveraged loans also may be less liquid than other loans. If the Fund voluntarily or involuntarily sold those types of loans, it
might not receive the full value it expected.
Due
to restrictions on transfers in loan agreements and the nature of the
private syndication of loans including, for example, the lack of publicly-available information, some loans are not as easily purchased
or sold as publicly-traded securities. Some loans are illiquid, which may make it difficult for the Fund to value them or dispose of them
at an acceptable price when it wants to. Additionally, valuation of Senior Loans may require greater research due to limited public information
available and elements of judgment may play a greater role in valuation since there may be a lack of objective data available. The market
price of investments in floating rate loans is expected to be less affected by changes in interest rates than fixed-rate investments because
floating rate loans pay a floating rate of interest that will fluctuate as market interest rates do and therefore should more closely
track market movements in interest rates.
Direct
investments in loans and, to a lesser degree, investments in participation
interests in or assignments of loans may be limited. A limited availability of loans could reduce the amount of attractive investments
for the Fund. If market demand for loans increases, the interest paid by loans that the Fund holds may decrease.
Compared
to securities and to certain other types of financial assets, purchases
and sales of loans take relatively longer to settle. This extended settlement process can (i) increase the counterparty credit risk borne
by the Fund; (ii) leave the Fund unable to timely vote, or otherwise act with respect to, loans it has agreed to purchase; (iii) delay
the Fund from realizing the proceeds of a sale of a loan; (iv) inhibit the Fund’s ability to re-sell a loan that it has agreed
to purchase if conditions change (leaving the Fund more exposed to price fluctuations); (v) prevent the Fund from timely collecting principal
and interest payments; and (vi) expose the Fund to adverse tax or regulatory consequences. To the extent the extended loan settlement
process gives rise to short-term liquidity needs, such as the need to satisfy redemption requests, the Fund may hold cash, sell investments
or temporarily borrow from banks or other lenders. If the Fund undertakes such measures, the Fund’s ability to pay redemption proceeds
in a timely manner, as well as the Fund’s performance, may be adversely affected.
If
the Fund invests in a loan via a participation, the Fund will be exposed to
the ongoing counterparty risk of the entity providing exposure to the loan (and, in certain circumstances, such entity’s credit
risk) in addition to the exposure the Fund has to the creditworthiness of the borrower. The terms of the participation may not entitle
the Fund to all rights of a direct lender under the loan (for example, with respect to consent, voting or enforcement rights). Therefore,
the Fund’s rights under a participation interest for a particular loan may be more limited than the rights of the original lender
or an investor who acquires an assignment of that loan. Where the Fund invests in a loan via a participation, the Fund generally will
have no right of direct recourse against the borrower or ability to otherwise directly enforce the terms of the loan agreement.
In
certain circumstances, loans may not be deemed to be securities, and
in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have the protection of the anti-fraud provisions
of the federal securities laws, as would be the case for bonds or stocks. Instead, in such cases, lenders generally rely on the contractual
provisions in the loan agreement itself, and common-law fraud protections under applicable state law.
Risk
of Investing in Loans. Investments in loans are subject to
interest rate risk and credit risk. Default in the payment of interest or principal on a loan will result in a reduction in the value
of the loan and consequently a reduction in the value of the Fund’s investments and a potential decrease in the NAV of the Fund.
Even if loans are secured by specific collateral, there can be no assurance that such collateral would satisfy the borrower’s obligation
in the event of non-payment of scheduled interest or principal or that such collateral could be readily liquidated. In the event of the
bankruptcy of a borrower, the Fund’s access to the collateral may be limited by bankruptcy or other insolvency loans and, therefore,
the Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing a loan.
The Fund may also invest in loans that are not secured by collateral. Unsecured loans involve additional risk because the lenders are
general unsecured creditors of the borrower and any secured creditors may have prior rights of recourse to the assets of the borrower,
and the assets of the borrower may be insufficient to satisfy in full all obligations owed to its creditors.
There
is no organized exchange on which loans are traded and reliable market
quotations may not be readily available. Therefore, elements of judgment may play a greater role in valuation of loans than for securities
with a more developed secondary market and the Fund may not realize full value in the event of the need to sell a loan. To the extent
that a secondary market does exist for certain loans, the market may be subject to volatility, irregular trading activity, wide bid/ask
spreads, decreased liquidity and extended trade settlement periods, any of which may impair the Fund’s ability to sell 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 for certain loans may result in cash not being immediately available to the Fund upon sale of the loan. As a result,
the Fund may have to sell other investments with shorter settlement periods or engage in borrowing transactions to raise cash to meet
its obligations.
Some
loans are subject to the risk that a court, pursuant to fraudulent conveyance
or other similar laws, could subordinate the loans to presently existing or future indebtedness of the borrower or take other action detrimental
to lenders such as invalidation of loans or causing interest previously paid to be refunded to the borrower. Investments in loans also
are subject to the risk of changes in legislation or state or federal regulations. If such legislation or regulations impose additional
requirements or restrictions on the ability of financial institutions to make loans, the availability of loans for investment by the Fund
may be adversely affected. Many loans are not registered with the SEC or any state securities commission and often are not rated by any
nationally recognized rating service. Generally, there is less readily available, reliable information about most loans than is the case
for many other types of securities. Although a loan may be senior to equity and
11 Invesco
SMA High Yield Bond Fund
other debt securities
in a borrower’s capital structure, such obligations may be structurally subordinated to obligations of the borrower’s subsidiaries.
Risks
of Loan Assignments and Participations. As the purchaser
of an assignment, the Fund typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under
the credit agreement with respect to the debt obligation; however, the Fund may not be able to unilaterally enforce all rights and remedies
under the loan and with regard to any associated collateral. Because assignments may be arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired by the Fund as the purchaser of an assignment may differ
from, and be more limited than, those held by the assigning lender. In addition, if the loan is foreclosed, the Fund could become part
owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. The Fund may be required to
pass along to a purchaser that buys a loan from the Fund by way of assignment, a portion of any fees to which the Fund is entitled under
the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with
the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Fund may not directly benefit
from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund will be subject to the credit
risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation,
the Fund may be treated as a general creditor of the lender and may not benefit from any setoff between the lender and the borrower.
Environmental,
Social and Governance (ESG) Considerations Risk.
The ESG considerations that may be assessed as part of the investment process to implement the Fund’s investment strategy in pursuit
of its investment objective may vary across types of investments and issuers eligible for investment, and not every ESG factor may be
identified or evaluated for every investment, and not every investment or issuer may be evaluated for ESG considerations. The Fund’s
portfolio will not be solely based on ESG considerations, and therefore the issuers in which the Fund invests may not be considered ESG-focused
issuers. The incorporation of ESG factors may affect the Fund’s exposure to certain issuers or industries and may not work as intended. The
Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different
methodology to identify and/or incorporate ESG factors. As investors can differ in their views regarding ESG factors, the Fund may invest
in issuers that do not reflect the views with respect to ESG of any particular investor. Information used by the Fund to evaluate such
factors may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined
characteristic, which could negatively impact the Fund’s ability to accurately assess credit quality, which could negatively impact
the Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to the Fund’s performance.
Active
Trading Risk.
Active trading of portfolio securities may result in high
brokerage costs, which may lower the Fund’s actual return. Active
trading also may increase the proportion of the Fund’s
gains that are short term, which are taxed at a higher rate than long term gains.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may affect the investments or investment
strategies available to the Adviser in connection with managing the Fund, which may also adversely affect the ability of the Fund to achieve
its investment objective.
Portfolio
Holdings
A description of
Fund policies and procedures with respect to the disclosure of Fund portfolio holdings is available in the SAI, which is available at
www.invesco.com/us.
The
Adviser(s)
Invesco
serves as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment
portfolios that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s
day-to-day management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor
in interest to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Exclusion
of Adviser from Commodity Pool Operator Definition
With respect to
the Fund, the Adviser has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the Commodity
Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration
or regulation as a CPO. In addition, the Adviser is relying upon a related exclusion from the definition of “commodity trading
advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The
terms of the CPO exclusion require the Fund, among other things, to
adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity
options and swaps, which in turn include non-deliverable forwards. The Fund is permitted to invest in these instruments as further described
in the Fund's SAI. However, the Fund is not intended as a vehicle for trading in the commodity futures, commodity options or swaps markets.
The CFTC has neither reviewed nor approved the Adviser’s reliance on these exclusions, or the Fund, its investment strategies or
this prospectus.
Adviser
Compensation
The Adviser does
not receive a management fee from the Fund, although wrap fee, separately managed or other discretionary account clients that invest in
the Fund will pay a fee to Invesco or its affiliates or their Program Sponsor. Invesco receives compensation from clients or Program Sponsors
in connection with its management of client accounts and participation in investment programs through which shares of the Fund are made
available.
A
discussion regarding the basis for the Board’s approval
of the investment advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent
annual or semi-annual report to shareholders.
Portfolio
Managers
The following individuals
are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio:
■
Niklas
Nordenfelt, CFA (lead manager), Portfolio Manager, who has been responsible for the Fund since 2023 and has been associated with Invesco
and/or its affiliates since 2020. From 2003 to 2020, he was associated with Wells Fargo Asset Management where he served as a Managing
Director, Senior Portfolio Manager and Co-Head of US High Yield.
12 Invesco
SMA High Yield Bond Fund
■
Rahim
Shad, Portfolio Manager, who has been responsible for the Fund since 2023 and has been associated with Invesco and/or its affiliates since
2009.
■
Philip
Susser, Portfolio Manager, who has been responsible for the Fund since 2023 and has been associated with Invesco and/or its affiliates
since 2021. From 2001 to 2020, he was associated with Wells Fargo Asset Management where he served as a Senior Portfolio Manager and co-head
of US High Yield.
The
lead manager generally has final authority over all aspects of the Fund’s
investment portfolio, including but not limited to, asset class allocations and other portfolio construction techniques, portfolio risk
assessment, and the management of daily cash flows in accordance with portfolio holdings. The degree to which the lead manager may perform
these functions, and the nature of these functions, may change from time to time.
More
information on the portfolio managers may be found at www.invesco.com/us.
The website is not part of this prospectus.
The
Fund's SAI provides additional information about the portfolio managers’
investments in the Fund, a description of the compensation structure and information regarding other accounts managed.
Other Information
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually. Capital
gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows. During
a time of economic volatility, the Fund may experience capital losses and unrealized depreciation in value of investments, the effect
of which may be to reduce or eliminate capital gains distributions for a period of time. Even though the Fund may experience a current
year loss, it may nonetheless distribute prior year capital gains.
13 Invesco
SMA High Yield Bond Fund
The
financial highlights show the Fund’s financial history for the past five fiscal years or, if shorter, the period of operations
of the Fund or any of its share classes. The financial highlights table is intended to help you understand the Fund’s financial
performance. Certain information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
This
information has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with
the Fund’s financial statements, is included in the Fund’s annual report, which is available upon request.
|
|
Period Ended
February 29,
2024(a)
|
|
Net
asset value, beginning of period |
$10.00
|
|
Net
investment income(b)
|
0.77
|
|
Net
gains on securities (both realized and unrealized) |
0.24
|
|
Total
from investment operations |
1.01
|
|
Less:
|
|
|
Dividends
from net investment income |
(0.78
) |
|
Distributions
from net realized gains |
(0.01
) |
|
Total
distributions |
(0.79
) |
|
Net
asset value, end of period |
$10.22
|
|
Total
return(c)
|
10.35
% |
|
Net
assets, end of period (000’s omitted) |
$10,220
|
|
Portfolio
turnover rate(d)
|
123
% |
|
Ratios/supplemental
data based on average net assets: |
|
|
Ratio
of expenses: |
|
|
With
fee waivers and/or expense reimbursements |
0.01
%(e)
|
|
Without
fee waivers and/or expense reimbursements |
2.65
%(e)
|
|
Ratio
of net investment income to average net assets |
7.55
%(e)
|
|
(a)
|
Commencement
date of March 1, 2023. |
|
(b)
|
Calculated
using average shares outstanding. |
|
(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. Not annualized for periods less
than one year, if applicable. |
|
(d)
|
Portfolio
turnover is not annualized for periods less than one year, if applicable. |
|
(e)
|
Annualized.
|
14 Invesco
SMA High Yield Bond Fund
Shareholder Account
Information and additional information is available on the Internet at www.invesco.com/us. To access your account, go to the tab for “Account
& Services,” then click on “Accounts Overview.” For additional information about Invesco Funds, consult the Fund’s
prospectus and SAI, which are available on that same website or upon request free of charge. The website is not part of this prospectus.
Purchasing
Shares and Shareholder Eligibility
Shares
of the Fund are purchased at net asset value without a sales charge or other fee.
Shares
of the Fund may be purchased by or on behalf of wrap fee, separately
managed and other discretionary accounts where Invesco or its affiliates has an agreement with the program sponsor (the “Program
Sponsor”) (typically, a registered investment adviser or broker/dealer), or directly with the client, to provide management or
advisory services to the managed account. A client agreement to open an account typically may be obtained by contacting Invesco or the
applicable Program Sponsor. Shares of the Fund may be purchased any day the New York Stock Exchange (the “NYSE”) is open.
Purchase
orders are made based on instructions from Invesco or your Program
Sponsor to the broker/dealer who executes trades for your account. To make a purchase, your broker/dealer must submit a purchase order
to the Fund’s transfer agent, either directly or through an appropriate clearing agency (e.g., the National Securities Clearing
Corporation—Fund/SERV). For purchase orders submitted directly to the Fund’s transfer agent, payment by federal funds must
be received by the Fund’s custodian by 3:00 p.m. (Eastern time) the next business day following the receipt of the purchase order.
The Fund reserves the right to reject any request to purchase Shares.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Minimum
Investments
The
minimum initial investment for a Fund is as follows:
|
Initial
Investment |
$1,000
|
|
Additional
Investment |
No
minimum |
Your
Program Sponsor may have certain investment requirements for your
account. For more information on buying shares if you hold shares through a wrap fee, separately managed or other discretionary account
program, please contact your Program Sponsor.
The
Fund is not responsible for any additional eligibility requirements, investment
minimums or other policies imposed by your Program Sponsor or for notifying shareholders of any changes to them. Please consult your Program
Sponsor for additional details regarding their policies.
Fund
Distributions
The
Fund’s dividend and capital gain distributions will be paid only in cash. Dividends and capital gains will not be reinvested in
additional Fund shares.
Redeeming
Shares
How
to Redeem Shares
Redemption
orders are placed on your behalf by Invesco or your Program Sponsor with the broker/dealer that executes trades for your separately managed
account. Shares of the Fund can be redeemed through the broker/dealer on any day the NYSE is open. Shares of the Fund are generally held
by investors participating in an eligible wrap fee, separately managed or other discretionary account program and cannot be transferred.
The
Fund reserves the right to redeem shares of any investor if the investor
ceases to be a participant in an eligible wrap fee, separately managed or other discretionary account program. The liquidation of Fund
shares will have
tax consequences for the investor. Each investor, by participating in a wrap fee, separately managed or other discretionary account program
that purchases Fund shares, agrees to the redemption of such Fund shares upon termination of its participation in such program. Subject
to applicable law, the Fund may, with prior notice, adopt other policies from time to time requiring mandatory redemption of shares in
certain circumstances.
For
more information about redeeming shares, please contact your Program
Sponsor.
Timing
and Method of Payment
The
Fund’s transfer agent typically expects to pay redemption proceeds to the broker/dealer that executes trades for your account within
one business day after a redemption request is received in good order, regardless of the method the Fund uses to make such payment.
However,
the Fund may take up to seven days to process a redemption request.
“Good order” means that all necessary information and documentation related to the redemption request have been provided
to the Fund’s transfer agent or authorized intermediary, such as the broker/dealer that executes trades for your account. If your
request is not in good order, the Fund’s transfer agent may require additional documentation in order to redeem your shares. Payment
may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
The
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Fund also has the ability
to redeem in kind as further described below under “Redemptions in Kind.”
Suspension
of Redemptions
The
right of redemption may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable
rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order
permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation
of the net assets of the Fund not reasonably practicable.
Redemptions
in Kind
Although
the Fund generally intends to pay redemption proceeds solely in cash, the Fund reserves the right to determine, in its sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of the Fund by transferring securities to the Fund in exchange for Fund shares (“in-kind purchases”).
In-kind purchases may
A-1 The
Invesco Funds
MCF—06/24
be made only upon
the Funds’ approval and determination that the securities are acceptable investments for the Fund and are purchased consistent
with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or terminate this practice at any
time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Fund
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Fund has
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500.
Your
Program Sponsor may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by your Program Sponsor or
for notifying shareholders of any changes to them. Please consult with your Program Sponsor if you have any questions regarding their
policies.
If
the Fund is not able to verify your identity as required by law, the Fund may,
at its discretion, redeem the account and distribute the proceeds to you.
Neither
the Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Rights
Reserved by the Fund
The
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase order.
■
Modify
any terms or conditions related to the purchase, redemption of shares of any Fund.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
In
general, excessive short-term trading activity in the Fund’s shares (i.e., a purchase of Fund shares followed shortly thereafter
by a redemption of such shares, or vice versa) may hurt the long-term performance of the Fund by requiring it to maintain an excessive
amount of cash or to liquidate portfolio holdings at a disadvantageous time, thus interfering with the efficient management of the Fund
by causing it to incur increased brokerage and administrative costs. Where excessive short-term trading activity seeks to take advantage
of arbitrage opportunities from stale prices for portfolio securities, the value of Fund shares held by long-term investors may be diluted.
However, because the Fund is designed to be a component of wrap fee, separately managed or other discretionary account programs that also
invest, at the direction of Invesco or the applicable Program Sponsor, in individual securities and other investments, Fund shares may
be purchased or redeemed on a frequent basis for rebalancing purposes or in order to
invest new monies
or to accommodate reductions in account size. The Fund is managed in a manner that is consistent with its role in wrap fee, separately
managed or other discretionary account programs. Generally, all purchase and redemption orders are likely to be initiated by Invesco or
the applicable Program Sponsor, (except in limited circumstances where the account client chooses to self-direct purchase and redemption
orders). Because managed account clients do not typically effect purchase and redemptions orders or directly trade in Fund shares, the
Board of Trustees has not adopted a market timing policy for the Fund. However, the Fund reserves the right to refuse purchase orders.
If the Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may,
in its sole discretion, reject any additional purchase orders. This discretion may be exercised with respect to purchase orders placed
by Invesco or your Program Sponsor on behalf of your managed account.
Pricing
of Shares
Determination
of Net Asset Value
The
price of the Fund’s shares is the Fund’s net asset value per share. The Fund values portfolio securities for which market
quotations are readily available at market value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars
based on the prevailing exchange rates on that day. The Fund values securities and assets for which market quotations are unavailable
at their “fair value,” which is described below. Securities and other assets quoted in foreign currencies are valued in
U.S. dollars based on the prevailing exchange rates on that day. The Fund values securities and assets for which market quotations are
unavailable at their “fair value,” which is described below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and the Fund that uses
fair value methodologies may value securities higher or lower than another fund
using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of the Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is
to discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing
A-2 The
Invesco Funds
service may reflect
appropriate factors such as market quotes, ratings, tranche type, industry, company performance, spread, individual trading characteristics,
institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of the Fund that invests in foreign securities may change on days when you will not be able to purchase or
redeem shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but the Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The Funds (except as noted below) value variable
rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market
value of such securities. The Funds that operate as government money market or retail money market funds value all of their securities
at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In
the
case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility,
stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If the Fund invests in other open-end funds, other
than open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
The
Fund generally determines the net asset value of its shares on each day
the NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, the Fund generally still will determine
the net asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be
valued at their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent
events occurring after an early close consistent with the valuation policy approved by the Board and related procedures.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), the Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Fund’s current net asset value per share is made available on the Fund’s
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by the Fund are to be valued at current market value if market quotations are readily available. All other securities and assets
of the Fund
for which market quotations are not readily available are to be valued at fair value determined in good faith consistent with the valuation
policy approved by the Board and related procedures. An effect of fair value pricing may be to reduce the ability of frequent traders
to take advantage of arbitrage opportunities resulting from potentially “stale” prices of portfolio holdings. However, it
cannot eliminate the possibility of frequent trading.
The
price the Fund could receive upon the sale of any investment
may differ from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique.
When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs
and assumptions (i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a
valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation
in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of
valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon
the sale of the investment.
Timing
of Orders
The
Fund prices purchase and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer agent,
authorized agent or designee receives an order in good order for the Fund. Purchase and redemption orders must be received prior to the
close of business on a business day, as defined by the Fund, to receive that day’s net asset value.
In
most cases, purchase and redemption orders are made based on instructions
from Invesco or the applicable Program Sponsor to the broker-dealer who executes trades for the account. Purchase and redemption orders
are processed at the net asset value next calculated after the broker-dealer receives the order on behalf of the account. Orders
A-3 The
Invesco Funds
received by the
broker-dealer prior to the time a Fund’s net asset value is determined on a business day will be processed at that day’s
net asset value, even if the order is received by the transfer agent after the Fund’s net asset value has been calculated that
day, as long as the order is received by the transfer agent prior to such time as agreed upon by the transfer agent and the broker-dealer.
Taxes
The
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis information provided
by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on their federal
income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect
to reporting of cost basis and available elections for your
account.
For more information about the cost basis methods offered by Invesco, please refer to the Tax Center located under the Account Access
& Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or
A-4 The
Invesco Funds
similar
laws. Withholding also may be required if a foreign entity that is a shareholder of a Fund fails to provide the Fund with appropriate
certifications or other documentation concerning its status under FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The above discussion
concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable to investors
holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such investors
should refer to the applicable account documents/program description for that arrangement for more information regarding the tax consequences
of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers
as
to the federal, state, local and foreign tax provisions applicable to them.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
A-5 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters
of each fiscal year as an exhibit to its reports on Form N-PORT.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-PORT, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O. Box 219078,
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
SMA High Yield Bond Fund
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
SMAHYB-PRO-1
|
Prospectus
June 28, 2024
Class:
Invesco Cash Reserve (GMQXX), C (GMCXX), R (GMLXX), Y (OMBXX), R6 (GMRXX)
Invesco
U.S. Government Money Portfolio
As
with all other mutual fund securities, the U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
You
could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot
guarantee it will do so. An investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The Fund’s sponsor is not required to reimburse the Fund for losses, and you should
not expect that the sponsor will provide financial support to the Fund at any time,
including during periods of market stress.
Table of Contents
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4
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A-1
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A-1
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A-2
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A-3
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A-3
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A-12
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A-12
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A-14
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A-17
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A-18
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A-18
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A-20
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A-22
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A-25
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A-27
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A-27
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A-27
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Back
Cover |
Invesco
U.S. Government Money Portfolio
Fund Summary
Investment
Objective(s)
The Fund’s
investment objective is to seek income consistent with stability of principal.
Fees
and Expenses of the Fund
This table describes
the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
The
table and Examples below do not reflect any transaction fees
that may be charged by financial intermediaries, or commissions that a shareholder may be required to pay directly to its financial intermediary
when buying or selling Class Y and Class R6 shares.
|
Class:
|
Invesco
Cash
Reserve
|
C
|
R
|
Y
|
R6
|
|
Management
Fees |
0.42
% |
0.42
% |
0.42
% |
0.42
% |
0.42
% |
|
| |||||
|
Distribution
and/or Service (12b-1) Fees |
0.15
|
1.00
|
0.50
|
None
|
None
|
|
| |||||
|
Other
Expenses |
0.26
|
0.26
|
0.26
|
0.26
|
0.10
|
|
| |||||
|
Total
Annual Fund Operating Expenses |
0.83
|
1.68
|
1.18
|
0.68
|
0.52
|
|
| |||||
|
Fee
Waiver and/or Expense Reimbursement2
|
0.10
|
0.10
|
0.10
|
0.10
|
0.04
|
|
| |||||
|
Total
Annual Fund Operating Expenses After Fee
Waiver
and/or Expense Reimbursement |
0.73
|
1.58
|
1.08
|
0.58
|
0.48
|
|
| |||||
|
1 |
A contingent
deferred sales charge may apply in some cases. See “Shareholder Account Information-Contingent Deferred Sales Charges (CDSCs).”
|
|
2 |
Invesco Advisers,
Inc. (Invesco or the Adviser) has contractually agreed 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 in the SAI) of Invesco
Cash Reserve, Class C, Class R, Class Y and Class R6 shares to 0.73%, 1.58%, 1.08%, 0.58% and 0.48%, respectively, of the Fund's average
daily net assets (the “expense limits”). Unless Invesco continues the fee waiver agreement, it will terminate on June
30, 2025. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without
approval of the Board of Trustees.
|
Example.
This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This Example does not include commissions and/or other forms
of compensation that investors may pay on transactions in Class Y and Class R6 shares. The Example also assumes that your investment has
a 5% return each year and that the Fund’s operating expenses remain equal to the Total Annual Fund Operating Expenses After Fee
Waiver and/or Expense Reimbursement in the first year and the Total Annual Fund Operating Expenses thereafter.
Although
your actual costs may be higher or lower, based on these assumptions,
your costs would be:
You
would pay the following expenses if you did not redeem your shares:
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Invesco
Cash Reserve |
$75
|
$255
|
$451
|
$1,016
|
|
| ||||
|
Class
C |
$161
|
$520
|
$903
|
$1,752
|
|
| ||||
|
Class
R |
$110
|
$365
|
$639
|
$1,423
|
|
| ||||
|
Class
Y |
$59
|
$207
|
$369
|
$837
|
|
| ||||
|
Class
R6 |
$49
|
$163
|
$287
|
$649
|
|
| ||||
Principal
Investment Strategies of the Fund
The Fund is a money
market fund that intends to qualify as a “government money market fund,” in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended. As a government money market fund, the Fund must invest at least 99.5% of its total assets in cash, government
securities and/or repurchase agreements that are “collateralized fully” (i.e. backed by cash or government securities).
The securities in which the Fund invests may have fixed, floating or variable interest rates. The Fund may also invest in affiliated and
unaffiliated government money market funds.
Under
normal market conditions, the Fund invests at least 80% of its net
assets (plus borrowings, if any, for investment purposes) in government securities and repurchase agreements that are collateralized by
government securities. In contrast to the Fund's 99.5% policy, the Fund's 80% policy does not include cash or repurchase agreements collateralized
by cash. The 80% investment policy is a non-fundamental investment policy and will not be changed without 60 days’ advance notice
to shareholders. Government security generally means any security issued or guaranteed as to principal or interest by the United States,
or by a person controlled or supervised by and acting as an instrumentality of the government of the United States.
The
Fund invests in conformity with SEC rules and regulation requirements
for money market funds for the quality, maturity, diversification and liquidity of investments. The Fund invests only in U.S. dollar-denominated
securities maturing within 397 calendar days of the date of purchase, with certain exceptions permitted by applicable regulations. The
Fund maintains a dollar-weighted average portfolio maturity of no more than 60 calendar days, and a dollar-weighted average life to maturity
of portfolio securities of not more than 120 calendar days (determined without reference to exceptions regarding interest rate adjustments).
The Fund will limit investments to those securities that are Eligible Securities as defined by applicable regulations at the time of purchase.
Eligible Securities are (i) government securities, (ii) shares of other money market funds, and (iii) securities determined to present
minimal credit risks by Invesco Advisers, Inc. (Invesco or the Adviser) pursuant to guidelines approved by the Fund's Board of Trustees
(the Board).
In
selecting securities for the Fund’s portfolio, the portfolio managers focus
on securities that offer safety, liquidity, and a competitive yield. The portfolio managers normally hold portfolio securities to maturity,
but may sell a particular security when they deem it advisable, such as when market or credit factors materially change.
1 Invesco
U.S. Government Money Portfolio
Principal
Risks of Investing in the Fund
As
with any mutual fund investment, loss of money is a risk of investing.
An
investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The risks associated with an investment in the Fund can increase during times of significant market
volatility. The principal risks of investing in the Fund are:
Money
Market Fund Risk.
You could lose money investing in the Fund. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The share price
of money market funds can fall below the $1.00 share price. The
Fund’s sponsor is not required to reimburse the Fund for losses, and you should not rely on or expect that the sponsor will enter
into support agreements or take other actions to provide financial support to the Fund or maintain the Fund’s $1.00 share price
at any time, including during periods of market stress. The credit quality of the Fund’s holdings can change rapidly
in certain markets, and the default of a single holding could have an adverse impact on the Fund’s share price. The Fund’s
share price can also be negatively affected during periods of high redemption pressures, illiquid markets, and/or significant market volatility.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. Changes in an issuer’s financial strength, the market’s perception of such strength or in the credit
rating of the issuer or the security may affect the value of debt securities. The credit analysis applied to the Fund’s debt securities
may fail to anticipate such changes, which could result in buying a debt security at an inopportune time or failing to sell a debt security
in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. Such changes and resulting increased volatility
may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult
to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity
may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s
investments may decline. Changes in central bank policies and other governmental actions and political events within the U.S. and abroad
may also, among
other things, affect investor and consumer expectations and confidence in the financial markets, which could result in higher than normal
redemptions by shareholders, which could potentially increase the Fund’s transaction costs.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
rapidly or unpredictably. Market risk may affect a single issuer, industry or
section
of the economy, or it may affect the market as a whole. The value of the Fund’s investments may go up or down due to general market
conditions that are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes
in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural
or environmental disasters, widespread disease or other public health issues, war, military conflict, acts of terrorism, economic crisis
or adverse investor sentiment generally. During a general downturn in the financial markets, multiple asset classes may decline in value.
When markets perform well, there can be no assurance that specific investments held by the Fund will rise in value.
Repurchase
Agreement Risk.
If the seller of a repurchase agreement defaults or otherwise does not fulfill its obligations, the Fund may incur delays and losses arising
from selling the underlying securities, enforcing its rights, or declining collateral value.
Yield
Risk. The Fund’s yield will vary as the short-term
securities in its portfolio mature or are sold and the proceeds are reinvested in other securities. When interest rates are very low or
negative, the Fund may not be able to maintain a positive yield or pay Fund expenses out of current income without impairing the Fund’s
ability to maintain a stable net asset value. Additionally, inflation may outpace and diminish investment returns over time. Recent and
potential future changes in monetary policy made by central banks and/or their governments may affect interest rates.
Floating
and Variable Rate Obligations Risk. Some fixed-income securities
have variable or floating interest rates that provide for a periodic adjustment in the interest rate paid on the securities. The rate
adjustment intervals may be regular and range from daily up to annually, or may be based on an event, such as a change in the stated prevailing
market rate. Floating and variable rate securities may be subject to greater liquidity risk than other debt securities, meaning that there
may be limitations on the Fund’s ability to sell the securities at any given time. Such securities also may lose value.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular investments made for the Fund’s portfolio. The Fund could experience
losses if these judgments prove to be incorrect. There can be no guarantee that the Adviser’s investment techniques or investment
decisions will produce the desired results. Additionally, legislative, regulatory, or tax developments may adversely affect management
of the Fund and, therefore, the ability of the Fund to achieve its investment objective.
Performance
Information
The
bar chart and performance table provide an indication of the risks of investing in the Fund. The Fund has adopted the
performance of the Oppenheimer Government Money Market Fund (the predecessor fund) as the result of a reorganization of the predecessor
fund into the Fund, which was consummated after the close of business on May 24, 2019 (the “Reorganization”). Prior to the
Reorganization, the Fund had not yet commenced operations. The bar chart shows changes in the performance of the predecessor fund and
the Fund from year to year as of December 31.
The
Fund’s (and the predecessor fund’s) past performance (before and after taxes) is not necessarily an indication of how the
Fund will perform in the future.
Effective
September 28, 2016, the predecessor fund changed its investment
strategy from a prime money market strategy to a strategy that classified the predecessor fund as a “government money market fund,”
as defined by Rule 2a-7 under the Investment Company Act. Performance shown prior to that date reflects the predecessor fund’s
former prime money market strategy, which permitted investments in certain types of securities that as a government money market fund,
the predecessor fund (and therefore the Fund) is no longer permitted to hold. Consequently, the performance information below would have
been different if the current
2 Invesco
U.S. Government Money Portfolio
investment limitations
had been in effect during the period prior to the predecessor fund’s conversion to a government money market fund.
Class
Y shares’ returns shown for periods ending on or prior to May 24, 2019
are those of the Class A shares of the predecessor fund. Class A shares and Class Y shares of the predecessor fund were reorganized into
Class Y shares of the Fund after the close of business on May 24, 2019. Class Y shares’ returns of the Fund will be different from
Class A shares’ returns of the predecessor fund as they have different expenses. Invesco Cash Reserve, Class C, Class R and Class
R6 shares’ returns of the Fund will be different from Class A returns of the predecessor fund as they have different expenses.
Fund
performance reflects any applicable fee waivers and expense reimbursements.
Performance returns would be lower without applicable fee waivers and expense reimbursements.
All
Fund performance shown assumes the reinvestment of dividends and
capital gains and the effect of the Fund’s expenses.
Updated
performance information is available on the Fund’s website at www.invesco.com/us.
|
Class
Y |
Period
Ended |
Returns
|
|
Year-to-date
|
March
31, 2024 |
1.20%
|
|
Best
Quarter |
December
31, 2023 |
1.22%
|
|
Worst
Quarter |
March
31, 2022 |
0.00%
|
Average Annual Total Returns (for the periods ended December 31, 2023)
|
|
Inception
Date
|
1
Year
|
5
Years
|
10
Years
|
|
Class
Y |
|
|
|
|
|
Return
Before Taxes |
1/2/1987
|
4.61
% |
1.54
% |
0.93
% |
|
Return
After Taxes on Distributions |
|
2.71
|
0.91
|
0.55
|
|
Return
After Taxes on Distributions and Sale of Fund
Shares
|
|
2.71
|
0.91
|
0.55
|
|
| ||||
|
Invesco
Cash Reserve |
5/24/2019
|
4.46
|
1.45
1
|
0.76
1
|
|
| ||||
|
Class
C |
5/24/2019
|
2.58
|
1.07
2
|
0.70
2
|
|
| ||||
|
Class
R |
5/24/2019
|
4.10
|
1.26
1
|
0.54
1
|
|
| ||||
|
Class
R6 |
5/24/2019
|
4.73
|
1.59
2
|
0.96
2
|
|
| ||||
1
Invesco Cash Reserve and Class
R shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares, restated to reflect
the higher 12b-1 fees applicable to Invesco Cash Reserve and Class R shares. Although invested in the same portfolio of securities, Invesco
Cash Reserve and Class R shares' returns of the Fund will be different from Class A shares' returns of the predecessor fund as they have
different expenses.
2
Class C and Class R6 shares’
performance shown prior to the inception date is that of the predecessor fund’s Class A shares at net asset value (NAV). Although
invested in the same portfolio of securities, Class C and Class R6 shares' returns of the Fund will be different from Class A shares'
returns of the predecessor fund as they have different expenses.
After-tax
returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant
to investors who hold their Fund shares through tax-advantaged arrangements, such as 401(k) plans, 529 college savings plans or individual
retirement accounts. After-tax
returns are shown for Class Y shares only and after-tax returns for other classes will vary.
Class
Y shares' seven day yield on December 31, 2023, was 4.69%.
For the current seven day yield, call (800) 959-4246.
Management
of the Fund
Investment
Adviser: Invesco Advisers, Inc. (Invesco or the Adviser)
Purchase
and Sale of Fund Shares
You may purchase,
redeem or exchange shares of the Fund on any business day through your financial adviser or by telephone at 800-959-4246. Shares of the
Fund, other than Class R6 shares, may also be purchased, redeemed or exchanged on any business day through our website at www.invesco.com/us
or by mail to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
The
minimum investments for C, R, Y and Invesco Cash Reserve shares for
fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial adviser |
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is purchasing
shares
through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other types of accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
With
respect to Class R6 shares, there is no minimum initial investment for
Employer Sponsored Retirement and Benefit Plans investing through a retirement platform that administers at least $2.5 billion in retirement
plan assets. All other Employer Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in
each Fund in which it invests.
For
all other institutional investors purchasing Class R6 shares, the minimum
initial investment is $1 million, unless such investment is made by (i) an investment company, as defined under the Investment Company
Act of 1940, as amended (1940 Act), that is part of a family of investment companies which own in the aggregate at least $100 million
in securities, or (ii) an account established with a 529 college savings plan managed by Invesco, in which case there is no minimum initial
investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts maintained by an intermediary, such as a broker, that (i) generally charges an asset-based fee or commission in
addition to those described in this prospectus, and (ii) maintains Class R6 shares and makes them available to retail investors.
Tax
Information
The
Fund’s distributions primarily are taxable to you as ordinary income, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan, 529 college savings plan or individual retirement account. Any distributions from a 401(k) plan or individual retirement
account may be taxed as ordinary income when withdrawn from such plan or account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Fund’s distributor
or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the broker-dealer or other intermediary and your salesperson or financial adviser to recommend the Fund over
another investment. Ask your salesperson or financial adviser or visit your financial intermediary’s website for more information.
3 Invesco
U.S. Government Money Portfolio
Objective(s)
and Strategies
The Fund’s
investment objective is to seek income consistent with stability of principal. The Fund’s investment objective may be changed by
the Board without shareholder approval.
The
Fund is a money market fund that intends to qualify as a “government
money market fund,” in accordance with Rule 2a-7 under the Investment Company Act of 1940, as amended. As a government money market
fund, the Fund must invest at least 99.5% of its total assets in cash, government securities and/or repurchase agreements that are “collateralized
fully” (i.e. backed by cash or government securities). The securities in which the Fund invests may have fixed, floating or variable
interest rates. The Fund may also invest in affiliated and unaffiliated government money market funds.
Under
normal market conditions, the Fund invests at least 80% of its net
assets (plus borrowings, if any, for investment purposes) in government securities and repurchase agreements that are collateralized by
government securities. In contrast to the Fund's 99.5% policy, the Fund's 80% policy does not include cash or repurchase agreements collateralized
by cash. The 80% investment policy is a non-fundamental investment policy and will not be changed without 60 days’ advance notice
to shareholders. Government security generally means any security issued or guaranteed as to principal or interest by the United States,
or by a person controlled or supervised by and acting as an instrumentality of the government of the United States.
The
Fund invests in conformity with SEC rules and regulation requirements
for money market funds for the quality, maturity, diversification and liquidity of investments. The Fund invests only in U.S. dollar-denominated
securities maturing within 397 calendar days of the date of purchase, with certain exceptions permitted by applicable regulations. The
Fund maintains a dollar-weighted average portfolio maturity of no more than 60 calendar days, and a dollar-weighted average life to maturity
of portfolio securities of not more than 120 calendar days (determined without reference to exceptions regarding interest rate adjustments).
The Fund will limit investments to those securities that are Eligible Securities as defined by applicable regulations at the time of purchase.
Eligible Securities are (i) government securities, (ii) shares of other money market funds, and (iii) securities determined to present
minimal credit risks by Invesco pursuant to guidelines approved by the Fund's Board.
In
selecting securities for the Fund’s portfolio, the portfolio managers focus
on securities that offer safety, liquidity, and a competitive yield. The portfolio managers normally hold portfolio securities to maturity,
but may sell a particular security when they deem it advisable, such as when market or credit factors materially change.
The
Fund may, from time to time, take temporary defensive positions by holding
cash, shortening the Fund’s dollar-weighted average portfolio maturity or investing in other securities that are Eligible Securities
for purchase by money market funds as described in the Fund’s Statement of Additional Information (SAI), in anticipation of or
in response to adverse market, economic, political or other conditions. If the Fund’s portfolio managers do so, different factors
could affect the Fund’s performance and the Fund may not achieve its investment objective.
The
Fund’s investments in the types of securities and other investments described
in this prospectus vary from time to time, and, at any time, the Fund may not be invested in all of the types of securities and other
investments described in this prospectus. The Fund may also invest in securities and other investments not described in this prospectus.
For
more information, see “Description of the Funds and Their Investments
and Risks” in the Fund’s SAI.
Risks
The principal risks
of investing in the Fund are:
Money
Market Fund Risk.
You could lose money investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot
guarantee it will do so. The share price of money market funds can fall below the $1.00 share price. The Fund’s sponsor is not
required to reimburse the Fund for losses, and you should not rely on or expect that the sponsor will enter into support agreements or
take other actions to provide financial support to the Fund or maintain the Fund’s $1.00 share price at any time, including during
periods of market stress. The credit quality of the Fund’s holdings can change rapidly in certain markets, and the default of a
single holding could have an adverse impact on the Fund’s share price. The Fund’s share price can also be negatively affected
during periods of high redemption pressures, illiquid markets, and/or significant market volatility.
Debt
Securities Risk.
The prices of debt securities held by the Fund will be affected by changes in interest rates, the creditworthiness of the issuer and other
factors. An increase in prevailing interest rates typically causes the value of existing debt securities to fall and often has a greater
impact on longer-duration debt securities and higher quality debt securities. Falling interest rates will cause the Fund to reinvest the
proceeds of debt securities that have been repaid by the issuer at lower interest rates. Falling interest rates may also reduce the Fund’s
distributable income because interest payments on floating rate debt instruments held by the Fund will decline. The Fund could lose money
on investments in debt securities if the issuer or borrower fails to meet its obligations to make interest payments and/or to repay principal
in a timely manner. If an issuer seeks to restructure the terms of its borrowings or the Fund is required to seek recovery upon a default
in the payment of interest or the repayment of principal, the Fund may incur additional expenses. Changes in an issuer’s financial
strength, the market’s perception of such strength or in the credit rating of the issuer or the security may affect the value of
debt securities. The credit analysis applied to the Fund’s debt securities may fail to anticipate such changes, which could result
in buying a debt security at an inopportune time or failing to sell a debt security in advance of a price decline or other credit event.
Changing
Fixed Income Market Conditions Risk.
Increases in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed
income markets to heightened volatility,
perhaps suddenly and to a significant degree, and to reduced
liquidity for certain fixed income investments, particularly those with longer maturities. It is difficult to predict the impact of interest
rate changes on various markets. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened
volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments may decline. Changes
in central bank policies and other governmental actions and political events within the U.S. and abroad, the U.S. government’s
inability at times to agree on a long-term budget and deficit reduction plan or other legislation aimed at addressing financial or economic
conditions, the threat of a federal government shutdown, and threats not to increase or suspend the federal government’s debt limit
may also, among other things, affect investor and consumer expectations and confidence in the financial markets, including in the U.S.
government’s credit rating and ability to service its debt. Such changes and events may adversely impact the Fund, including its
operations, universe of potential investment options, and return potential, and could also result in higher than normal redemptions by
shareholders, which could potentially increase the Fund’s transaction costs and potentially lower the Fund’s performance
returns.
U.S.
Government Obligations Risk. Obligations
of U.S. government agencies
and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. government, which could
affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Market
Risk.
The market values of the Fund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes
4 Invesco
U.S. Government Money Portfolio
rapidly or unpredictably.
Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. The value of the Fund’s
investments may go up or down due to general market conditions that are not specifically related to the particular issuer, such as real
or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency
rates, regional or global instability, or adverse investor sentiment generally. The value of the Fund’s investments may also go
up or down due to factors that affect an individual issuer or a particular industry or sector, such as changes in production costs and
competitive conditions within an industry. In addition, natural or environmental disasters, widespread disease or other public health
issues, war, military conflict, acts of terrorism, economic crisis or other events may have a significant impact on the value of the Fund’s
investments, as well as the financial markets and global economy generally. Such circumstances may also impact the ability of the Adviser
to effectively implement the Fund’s investment strategy. During a general downturn in the financial markets, multiple asset classes
may decline in value. When markets perform well, there can be no assurance that specific investments held by the Fund will rise in value.
■
Market
Disruption Risks Related to Armed Conflict. As a result of
increasingly interconnected global economies
and financial markets, armed conflict between countries or
in a geographic region, for example the current conflicts
between Russia
and Ukraine in Europe
and Hamas and Israel in the
Middle East,
has
the potential to adversely impact the Fund’s investments.
Such conflicts, and other corresponding events, have had, and could continue to have, severe negative effects on regional and global economic
and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts may be particularly
acute in certain sectors. The
timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on Fund performance and the value
of an investment in the Fund, even beyond any direct investment exposure the Fund may have to issuers located in or with significant exposure
to an impacted country or geographic regions.
Repurchase
Agreement Risk.
If the seller of a repurchase agreement defaults or otherwise does not fulfill its obligations, the Fund may incur delays and losses arising
from selling the underlying securities, enforcing its rights, or declining collateral value.
The
Fund will not enter into a repurchase agreement that will cause more
than 5% of its total assets to be subject to repurchase agreements maturing in more than seven calendar days. Subject to the portfolio
requirements of Rule 2a-7, there is no limit on the amount of the Fund’s assets that may be subject to repurchase agreements of
seven days or less.
Yield
Risk. The Fund’s yield will vary as the short-term
securities in its portfolio mature or are sold and the proceeds are reinvested in other securities. When interest rates are very low or
negative, the Fund may not be able to maintain a positive yield or pay Fund expenses out of current income without impairing the Fund’s
ability to maintain a stable net asset value. Additionally, inflation may outpace and diminish investment returns over time. Recent and
potential future changes in monetary policy made by central banks and/or their governments may affect interest rates.
Floating
and Variable Rate Obligations Risk. Some fixed-income securities
have variable or floating interest rates that provide for a periodic adjustment in the interest rate paid on the securities. The rate
adjustment intervals may be regular and range from daily up to annually, or may be based on an event, such as a change in the stated prevailing
market rate. Floating and variable rate securities may be subject to greater liquidity risk than other debt securities, meaning that there
may be limitations on the Fund’s ability to sell the securities at any given time. Such securities also may lose value.
Management
Risk.
The Fund is actively managed and depends heavily on the Adviser’s judgment about markets, interest rates or the attractiveness,
relative values, liquidity, or potential appreciation of particular
investments made
for the Fund’s portfolio. The Fund could experience losses if these judgments prove to be incorrect. There can be no guarantee
that the Adviser’s investment techniques or investment decisions will produce the desired results. Additionally, legislative, regulatory,
or tax developments may affect the investments or investment strategies available to the Adviser in connection with managing the Fund,
which may also adversely affect the ability of the Fund to achieve its investment objective.
Portfolio
Holdings
Information concerning
the Fund's portfolio holdings as well as its dollar-weighted average portfolio maturity and dollar-weighted average life to maturity as
of the last business day or subsequent calendar day of the preceding month will be posted on its website no later than five business days
after the end of the month and remain posted on the website for six months thereafter.
A
description of Fund policies and procedures with respect to the disclosure
of Fund portfolio holdings is available in the SAI, which is available at www.invesco.com/us.
The
Adviser(s)
Invesco
serves as the Fund’s investment adviser. The Adviser manages the investment operations of the Fund as well as other investment
portfolios that encompass a broad range of investment objectives, and has agreed to perform or arrange for the performance of the Fund’s
day-to-day management. The Adviser is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309. The Adviser, as successor
in interest to multiple investment advisers, has been an investment adviser since 1976.
Sub-Advisers.
Invesco has entered into one or more Sub-Advisory Agreements with certain affiliates to serve as sub-advisers to the Fund (the Sub-Advisers).
Invesco may appoint the Sub-Advisers from time to time to provide discretionary investment management services, investment advice, and/or
order execution services to the Fund. The Sub-Advisers and the Sub-Advisory Agreements are described in the SAI.
Potential
New Sub-Advisers (Exemptive Order Structure). The SEC has
also granted exemptive relief that permits the Adviser, subject to certain conditions, to enter into new sub-advisory agreements with
affiliated or unaffiliated sub-advisers on behalf of the Fund without shareholder approval. The exemptive relief also permits material
amendments to existing sub-advisory agreements with affiliated or unaffiliated sub-advisers (including the Sub-Advisory Agreements with
the Sub-Advisers) without shareholder approval. Under this structure, the Adviser has ultimate responsibility, subject to oversight of
the Board, for overseeing such sub-advisers and recommending to the Board their hiring, termination, or replacement. The structure does
not permit investment advisory fees paid by the Fund to be increased without shareholder approval, or change the Adviser's obligations
under the investment advisory agreement, including the Adviser's responsibility to monitor and oversee sub-advisory services furnished
to the Fund.
Adviser
Compensation
During
the fiscal year ended February 29, 2024, the Adviser received compensation of 0.32% of the Fund average daily net assets, after fee waiver
and/or expense reimbursement, if any. The advisory fee payable by the Fund shall be reduced by any amounts paid by the Fund under the
administrative services agreement with the Adviser.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement and investment sub-advisory agreements of the Fund is available in the Fund’s most recent annual or semi-annual
report to shareholders.
5 Invesco
U.S. Government Money Portfolio
Other Information
Sales
Charges
Purchases of Class C
shares are subject to a contingent deferred sales charge (CDSC) if you sell Class C shares within one year of purchase; however, the CDSC
shall not apply to the purchases of Class C shares where the selling broker-dealer was not paid a commission at the time of purchase.
For more information on CDSCs, see the “Shareholder Account Information—Contingent Deferred Sales Charges (CDSCs)”
section of this prospectus.
Dividends
and Distributions
The Fund expects,
based on its investment objective and strategies, that its distributions, if any, will consist primarily of ordinary income.
Dividends
The Fund generally
declares dividends from net investment income, if any, daily and pays them monthly.
In
order to earn dividends on a purchase of Fund shares on the day of the
purchase, the transfer agent must receive payment in federal funds before 12:00 noon Eastern Time on that day. Purchases made by payments
in other forms, or payments in federal funds received after 12:00 noon Eastern Time but before the close of the customary trading session
of the New York Stock Exchange, will begin to earn dividends on the next business day.
Capital
Gains Distributions
The Fund generally
distributes long-term and short-term capital gains (net of any available capital loss carryovers), if any, at least annually.
6 Invesco
U.S. Government Money Portfolio
The financial highlights
information presented for the Fund includes the financial history of the predecessor fund, which was reorganized into the Fund after the
close of business on May 24, 2019. The financial highlights show the Fund’s and predecessor fund’s financial history for
the past five fiscal years or, if shorter, the applicable period of operations since the inception of the Fund or predecessor fund or class
of Fund or predecessor fund shares. The financial highlights table is intended to help you understand the Fund’s and the predecessor
fund’s financial performance. Certain information reflects financial results for a single Fund share.
The
total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund or predecessor fund (assuming reinvestment of all dividends and distributions). This information
has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with the Fund’s
financial statements, is included in the Fund’s annual report, which is available upon request. Effective February 29, 2020, the
Fund changed its fiscal year end from July 31 to the last day in February.
|
|
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(c)
|
Ratio
of net
investment
income
to
average
net
assets |
|
Invesco
Cash Reserve | |||||||||||||
|
Year
ended 02/29/24 |
$1.00
|
$0.05
|
$(0.00
) |
$0.05
|
$(0.05
) |
$—
|
$(0.05
) |
$1.00
|
4.62
% |
$53,265
|
0.73
% |
0.83
% |
4.52
% |
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
—
|
(0.02
) |
1.00
|
1.79
|
53,056
|
0.66
|
0.83
|
1.76
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
53,481
|
0.07
|
0.83
|
0.00
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.03
|
60,704
|
0.18
|
0.89
|
0.04
|
|
Seven
months ended 02/29/20 |
1.00
|
0.01
|
(0.00
) |
0.01
|
(0.01
) |
—
|
(0.01
) |
1.00
|
0.66
|
12,874
|
0.72
(d)
|
0.94
(d)
|
1.14
(d)
|
|
Period
ended 07/31/19(e)
|
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
(0.00
) |
(0.00
) |
1.00
|
0.30
|
3,285
|
0.67
(d)
|
0.86
(d)
|
1.67
(d)
|
|
| |||||||||||||
|
Class
C | |||||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.04
|
(0.00
) |
0.04
|
(0.04
) |
—
|
(0.04
) |
1.00
|
3.73
|
6,980
|
1.58
|
1.68
|
3.67
|
|
Year
ended 02/28/23 |
1.00
|
0.01
|
(0.00
) |
0.01
|
(0.01
) |
—
|
(0.01
) |
1.00
|
1.18
|
7,822
|
1.27
|
1.68
|
1.14
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
8,105
|
0.07
|
1.68
|
0.00
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
11,019
|
0.19
|
1.74
|
0.03
|
|
Seven
months ended 02/29/20 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.17
|
2,313
|
1.55
(d)
|
1.79
(d)
|
0.31
(d)
|
|
Period
ended 07/31/19(e)
|
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
(0.00
) |
(0.00
) |
1.00
|
0.16
|
497
|
1.43
(d)
|
1.64
(d)
|
0.91
(d)
|
|
| |||||||||||||
|
Class
R | |||||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.04
|
(0.00
) |
0.04
|
(0.04
) |
—
|
(0.04
) |
1.00
|
4.25
|
12,881
|
1.08
|
1.18
|
4.17
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
—
|
(0.02
) |
1.00
|
1.53
|
6,791
|
0.93
|
1.18
|
1.48
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
5,042
|
0.07
|
1.18
|
0.00
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.02
|
5,857
|
0.19
|
1.24
|
0.03
|
|
Seven
months ended 02/29/20 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.46
|
1,099
|
1.05
(d)
|
1.28
(d)
|
0.81
(d)
|
|
Period
ended 07/31/19(e)
|
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
(0.00
) |
(0.00
) |
1.00
|
0.23
|
182
|
1.08
(d)
|
1.08
(d)
|
1.27
(d)
|
|
| |||||||||||||
|
Class
Y | |||||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
(0.00
) |
0.05
|
(0.05
) |
—
|
(0.05
) |
1.00
|
4.77
|
1,154,923
|
0.58
|
0.68
|
4.67
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
—
|
(0.02
) |
1.00
|
1.91
|
1,224,628
|
0.53
|
0.68
|
1.88
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
1,283,313
|
0.07
|
0.68
|
0.00
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.04
|
1,470,499
|
0.18
|
0.74
|
0.04
|
|
Seven
months ended 02/29/20 |
1.00
|
0.01
|
(0.00
) |
0.01
|
(0.01
) |
—
|
(0.01
) |
1.00
|
0.74
|
1,558,623
|
0.58
(d)
|
0.80
(d)
|
1.28
(d)
|
|
Year
ended 07/31/19 |
1.00
|
0.02
|
0.00
|
0.02
|
(0.02
) |
(0.00
) |
(0.02
) |
1.00
|
1.77
|
1,669,766
|
0.58
|
0.62
|
1.76
|
|
| |||||||||||||
|
Class
R6 | |||||||||||||
|
Year
ended 02/29/24 |
1.00
|
0.05
|
(0.00
) |
0.05
|
(0.05
) |
—
|
(0.05
) |
1.00
|
4.91
|
12
|
0.48
|
0.52
|
4.77
|
|
Year
ended 02/28/23 |
1.00
|
0.02
|
(0.00
) |
0.02
|
(0.02
) |
—
|
(0.02
) |
1.00
|
1.99
|
10
|
0.45
|
0.51
|
1.97
|
|
Year
ended 02/28/22 |
1.00
|
0.00
|
(0.00
) |
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.01
|
10
|
0.07
|
0.53
|
0.00
|
|
Year
ended 02/28/21 |
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
—
|
(0.00
) |
1.00
|
0.05
|
10
|
0.16
|
0.57
|
0.06
|
|
Seven
months ended 02/29/20 |
1.00
|
0.01
|
(0.00
) |
0.01
|
(0.01
) |
—
|
(0.01
) |
1.00
|
0.80
|
10
|
0.48
(d)
|
0.54
(d)
|
1.38
(d)
|
|
Period
ended 07/31/19(e)
|
1.00
|
0.00
|
0.00
|
0.00
|
(0.00
) |
(0.00
) |
(0.00
) |
1.00
|
0.34
|
10
|
0.48
(d)
|
0.48
(d)
|
1.88
(d)
|
|
| |||||||||||||
|
(a)
|
Calculated
using average shares outstanding. |
|
(b)
|
Includes
adjustments in accordance with accounting principles generally accepted in the United States of America and does not include sales charges
and is not annualized for periods less than
one
year, if applicable. |
|
(c)
|
Does
not include indirect expenses from affiliated fund fees and expenses of 0.00% for the seven months ended February 29, 2020 and the year
ended July 31, 2019. |
|
(d)
|
Annualized.
|
|
(e)
|
Commencement
date after the close of business on May 24, 2019. |
7 Invesco
U.S. Government Money Portfolio
In
addition to the Fund(s), the Adviser serves as investment adviser to many other Invesco mutual funds that are offered to investors (Invesco
Funds or Funds). The following information is about the Invesco Funds and their share classes that have different fees and expenses. Certain
Invesco Funds have their own “Shareholder
Account Information Section” that
should be consulted for specific information related to those Funds.
Some
investments in the Funds are made through accounts that are maintained
by intermediaries (and not in the name of an individual investor) and some investments are made indirectly through products that use the
Funds as underlying investments, such as Retirement and Benefit Plans, funds of funds, qualified tuition plans, and variable insurance
contracts (these products are generally referred to as conduit investment vehicles). If shares of the Funds are held in an account maintained
by an intermediary or in the name of a conduit investment vehicle (and not in the name of an individual investor), the intermediary or
conduit investment vehicle may impose rules that differ from, and/or charge a transaction or other fee in addition to, those described
in this prospectus. As a result, the availability of certain share classes and/or shareholder privileges or services described in this
prospectus will depend on the policies, procedures and trading platforms of the financial intermediary or conduit investment vehicle.
Accordingly, through your financial intermediary you may be invested in a share class that is subject to higher annual fees and expenses
than other share classes that are offered in this prospectus. Investing in a share class subject to higher annual fees and expenses may
have an adverse impact on your investment return. Please consult your financial adviser to consider your options, including your eligibility
to qualify for the share classes and/or shareholder privileges or services described in this prospectus.
The
Fund is not responsible for any additional share class eligibility requirements,
investment minimums, exchange privileges, or other policies imposed by financial intermediaries or for notifying shareholders of any changes
to them. Please consult your financial adviser or other financial intermediary for details.
Unless
otherwise provided, the following are certain defined terms used throughout
this prospectus:
■
Employer
Sponsored Retirement and Benefit Plans include (i) employer sponsored pension or profit sharing plans that qualify under section
401(a)
of the Internal Revenue Code of 1986, as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to plans described under (i) above, such
as 457 plans and executive deferred compensation arrangements; (iii) health savings accounts maintained pursuant to Section 223 of the
Code; and (iv) voluntary employees’ beneficiary arrangements maintained pursuant to Section 501(c)(9) of the Code.
■
Individual
Retirement Accounts (IRAs) include Traditional and Roth IRAs.
■
Employer
Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction Simplified Employee Pension (SAR-SEP), and Savings Incentive
Match Plan for Employees of Small Employers (SIMPLE) IRAs.
■
Retirement
and Benefit Plans include Employer Sponsored Retirement and Benefit Plans, IRAs and Employer Sponsored IRAs.
Shareholder
Account Information and additional information is available on
the Internet at www.invesco.com/us. To access your account, go to the tab for “Account & Services,” then click on “Accounts
Overview.” For additional information about Invesco Funds, consult the Fund’s prospectus and SAI, which are available on
that same website or upon request free of charge. The website is not part of this prospectus.
Choosing
a Share Class
Each
Fund may offer multiple classes of shares and not all Funds offer all share classes discussed herein. Each class represents an interest
in the same portfolio of investments. Certain classes have higher expenses than other classes which may lower the return on your investment
when compared to a less expensive class. In deciding which class of shares to purchase, you should consider the following attributes of
the various share classes, among other things: (i) the eligibility requirements that apply to purchases of a particular class and
any eligibility requirements of your financial intermediary, (ii) the initial sales charges and contingent deferred sales charges
(CDSCs), if any, applicable to the class, (iii) the 12b-1 fee, if any, paid by the class, and (iv) any services you may receive
from a financial intermediary. Please contact your financial adviser to assist you in making your decision. Please refer to the prospectus
fee table for more information on the fees and expenses of a particular Fund’s share classes.
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
▪ Initial
sales charge which may be
waived
or reduced1
|
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
▪ No
initial sales charge |
|
▪ CDSC
on certain redemptions1
|
▪ CDSC
on redemptions within one
year
if a commission has been paid |
▪ No
CDSC |
▪ No
CDSC |
▪ No
CDSC |
|
▪ 12b-1
fee of up to 0.25%2
|
▪ 12b-1
fee of up to 1.00%3
|
▪ 12b-1
fee of up to 0.50% |
▪ No
12b-1 fee |
▪ No
12b-1 fee |
|
|
▪ Investors
may only open an
account
to purchase Class C
shares
if they have appointed a
financial
intermediary that allows
for
new accounts in Class C shares
to
be opened. This restriction does
not
apply to Employer Sponsored
Retirement
and Benefit Plans. |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
▪ Does
not convert to Class A shares |
A-1 The
Invesco Funds
MCF—06/24
|
Share
Classes |
|
|
|
|
|
Class
A |
Class
C |
Class
R |
Class
Y |
Class
R5 and R6 |
|
|
▪ Eligible
for automatic conversion to
Class
A shares. See “Automatic
Conversion
of Class C and Class
CX
Shares” herein. |
▪ Intended
for Retirement and
Benefit
Plans4
|
|
▪ Special
eligibility requirements and
investment
minimums apply (see
“Share
Class Eligibility – Class R5
and
R6 shares” below) |
|
|
▪ Purchase
maximums apply |
|
|
|
1
Invesco
Conservative Income Fund, Invesco Government Money Market Fund and Invesco Short Term Municipal Fund do not have initial sales charges
or CDSCs on redemptions in most cases.
2
Class
A2 shares of Invesco Limited Term Municipal Income Fund and Investor Class shares of Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio do not have a 12b-1 fee; Invesco Short Term Bond Fund Class A shares and
Invesco Short Duration Inflation Protected Fund Class A2 shares have a 12b-1 fee of 0.15%; and Invesco Conservative Income Fund Class
A shares have a 12b-1 fee of 0.10%.
3
The
12b-1 fee for Class C shares of certain Funds is less than 1.00%. The “Fees and Expenses of the Fund—Annual Fund Operating
Expenses” section of this prospectus reflects the actual 12b-1 fees paid by a Fund.
4
Your
financial intermediary may have additional eligibility criteria for Class R shares. Please see the “Financial Intermediary- Specific
Arrangements” section of this prospectus for further information.
In addition to
the share classes shown in the chart above, the following Funds offer the following additional share classes further described in this
prospectus:
■
Investor
Class shares: Invesco Diversified Dividend Fund, Invesco Dividend Income Fund, Invesco Energy Fund, Invesco EQV European Equity Fund,
Invesco Health Care Fund, Invesco High Yield Fund, Invesco Income Fund, Invesco Income Advantage U.S. Fund, Invesco Government Money Market
Fund, Invesco Municipal Income Fund, Invesco Real Estate Fund, Invesco Small Cap Growth Fund, Invesco Technology Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio.
■
Class
A2 shares: Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund;
■
Class AX
shares: Invesco Government Money Market Fund;
■
Class CX
shares: Invesco Government Money Market Fund;
■
Class
P shares: Invesco Summit Fund;
■
Class
S shares: Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund; and
■
Invesco
Cash Reserve Shares: Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Share
Class Eligibility
The
availability of certain share classes will depend on how you purchased your shares. Intermediaries may have different policies regarding
the availability of certain share classes than those described below. You should consult your financial adviser to consider your options,
including your eligibility to qualify for the share classes described below. The Fund is not responsible for eligibility requirements
imposed by financial intermediaries or for notifying shareholders of any changes to them. See “Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific eligibility requirements. Please
consult with your financial intermediary if you have any questions regarding their policies.
Class A,
C and Invesco Cash Reserve Shares
Class A,
C and Invesco Cash Reserve Shares are generally available to all retail investors, including individuals, trusts, corporations, business
and charitable organizations and Retirement and Benefit Plans. Investors may only open an account to purchase Class C shares if they have
appointed a financial intermediary that allows for new accounts in Class C shares to be opened. This restriction does not apply to Employer
Sponsored Retirement and Benefit Plans. The share classes offer different fee structures that are intended to compensate financial intermediaries
for services provided in connection with the sale of shares and continued maintenance of the customer relationship. You should consider
the services provided by your financial adviser and any other financial intermediaries who will be involved in the servicing of your account
when choosing a share class.
Class A2 Shares
Class A2 shares,
which are offered only on Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund, are closed to
new investors. All references in this “Shareholder Account Information” section of this prospectus to Class A shares shall
include Class A2 shares, unless otherwise noted.
Class AX
and CX Shares
Class AX
and CX shares are closed to new investors. Only investors who have continuously maintained an account in Class AX or CX of Invesco
Government Money Market Fund may make additional purchases into Class AX and CX, respectively, of Invesco Government Money Market
Fund. All references in this “Shareholder Account Information” section of this prospectus to Class A, C or R shares
of the Invesco Funds shall include CX
shares of Invesco Government Money Market Fund, unless otherwise
noted. All references in this “Shareholder Account Information” section of this prospectus to Invesco Cash Reserve Shares
of Invesco Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund, unless otherwise noted.
Class P
Shares
In
addition to the other share classes discussed herein, the Invesco Summit Fund offers Class P shares, which were historically sold
only through the AIM Summit Investors Plans I and II (each a Plan and, collectively, the Summit Plans). Class P shares are sold with
no initial sales charge and have a 12b-1 fee of 0.10%. However, Class P shares are not sold to members of the general public. Only
shareholders who had accounts in the Summit Plans at the close of business on December 8, 2006 may purchase Class P shares and
only until the total of their combined investments in the Summit Plans and in Class P shares directly equals the face amount of their
former Plan under the 30 year extended investment option. The face amount of a Plan is the combined total of all scheduled monthly
investments under the Plan. For a Plan with a scheduled monthly investment of $100.00, the face amount would have been $36,000.00 under
the 30 year extended investment option.
Class R
Shares
Class R
shares are intended for Retirement and Benefit Plans. Certain financial intermediaries have additional eligibility criteria regarding
Class R shares. If you received Class R shares as a result of a merger or reorganization of a predecessor fund into any of the Funds,
you will be permitted to make additional Class R shares purchases.
Class
R5 and R6 Shares
Class
R5 and R6 shares of the Funds are available for use by Employer Sponsored Retirement and Benefit Plans, held either at the plan level
or through omnibus accounts, that generally process no more than one net redemption and one net purchase transaction each day.
Class
R5 and R6 shares of the Funds are also available to institutional investors.
Institutional investors are: banks, trust companies, collective trust funds, entities acting for the account of a public entity (e.g.,
Taft-Hartley funds, states, cities or government agencies), funds of funds or other pooled
A-2 The
Invesco Funds
investment vehicles,
529 college savings plans, financial intermediaries and corporations investing for their own accounts, endowments and foundations. For
information regarding investment minimums for Class R5 and R6 shares, please see “Minimum Investments” below.
Class
R6 shares of the Funds are also available through an intermediary that
has agreed with Invesco Distributors, Inc. to make such shares available for use in retail omnibus accounts that generally process no
more than one net redemption and one net purchase transaction each day.
Shareholders
eligible to purchase Class R6 Shares must meet the requirements
specified by their intermediary. Not all intermediaries offer Class R6 Shares to their customers.
Closure
of Class R5 shares
The
Fund will discontinue sales of its Class R5 shares to new investors after
the close of business on September 30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional purchases of Class R5 shares of
the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated plans may continue to make additional purchases of Class
R5 shares of the Fund and may add new participant accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer
Sponsored Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of September 30, 2024 and
remain invested in Class R5 shares of the Fund after that date.
Class S
Shares
Class S
shares are limited to investors who purchase shares with the proceeds received from a systematic contractual investment plan redemption
within the 12 months prior to purchasing Class S shares, and who purchase through an approved financial intermediary that has
an agreement with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general public.
An investor purchasing Class S shares will not pay an initial sales charge. The investor will no longer be eligible to purchase additional
Class S shares at that point where the value of the contributions to the prior systematic contractual investment plan combined with
the subsequent Class S share contributions equals the face amount of what would have been the investor’s systematic contractual
investment plan under the 30-year investment option. The face amount of a systematic contractual investment plan is the combined total
of all scheduled monthly investments under that plan. For a plan with a scheduled monthly investment of $100.00, the face amount would
have been $36,000.00 under the 30-year extended investment option.
Class Y
Shares
Class
Y shares are available to (i) investors who purchase through an account that is charged an asset-based fee or commission by a financial
intermediary, including through brokerage platforms, where a broker is acting as the investor’s agent, that may require the payment
by the investor of a commission and/or other form of compensation to that broker, (ii) endowments, foundations, or Employer Sponsored
Retirement and Benefit Plans (with the exception of “Solo 401(k)” Plans and 403(b) custodial accounts held directly at Invesco),
(iii) banks or bank trust departments acting on their own behalf or as trustee or manager for trust accounts, or (iv) any current, former
or retired trustee, director, officer or employee (or immediate family members of a current, former or retired trustee, director, officer
or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
Subject
to any conditions or limitations imposed on the servicing of Class
Y shares by your financial adviser, if you received Class Y shares as a result of a merger or reorganization of a predecessor fund into
any of the Funds, you will be permitted to make additional Class Y share purchases. In addition, you will be permitted to make additional
Class Y shares purchases if you owned Class Y shares in a “Solo 401(k)” Plan or 403(b) custodial account held directly at
Invesco if you held such shares in your account on or prior to May 24, 2019, or if you currently own Class Y shares held in a previously
eligible account (as outlined in (i) in the above paragraph) for which you no longer have a financial intermediary.
Investor
Class Shares
Investor Class
shares are sold with no initial sales charge and have a maximum 12b-1 fee of 0.25%. Only the following persons may purchase Investor Class
shares:
■
Investors
who established accounts prior to April 1, 2002, in Investor Class shares with Invesco Distributors, Inc. (Invesco Distributors) who have
continuously maintained an account in Investor Class shares (this includes anyone listed in the registration of an account, such as a
joint owner, trustee or custodian, and immediate family members of such persons) without a designated intermediary. These investors are
referred to as “Investor Class grandfathered investors.”
■
Customers
of a financial intermediary that has had an agreement with the Funds’ distributor or any Funds that offered Investor Class shares
prior to April 1, 2002, that has continuously maintained such agreement. These intermediaries are referred to as “Investor
Class grandfathered intermediaries.”
■
Any
current, former or retired trustee, director, officer or employee (or immediate family member of a current, former or retired trustee,
director, officer or employee) of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
For
additional shareholder eligibility requirements with respect to Invesco
Premier Portfolio, please see “Shareholder Account Information – Purchasing Shares and Shareholder Eligibility –
Invesco Premier Portfolio.”
Distribution
and Service (12b-1) Fees
Except
as noted below, each Fund has adopted a service and/or distribution plan pursuant to SEC Rule 12b-1. A 12b-1 plan allows a Fund to pay
distribution and service fees to Invesco Distributors to compensate or reimburse, as applicable, Invesco Distributors for its efforts
in connection with the sale and distribution of the Fund’s shares, all or a substantial portion of which are paid to the dealer
of record. Because the Funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cause you to pay more than the maximum permitted initial sales charges described in this prospectus.
The
following Funds and share classes do not have 12b-1 plans:
■
Invesco
Limited Term Municipal Income Fund, Class A2 shares.
■
Invesco
Government Money Market Fund, Investor Class shares.
■
Invesco
Premier Portfolio, Investor Class shares.
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares.
■
All
Funds, Class Y, Class R5 and Class R6 shares
Under
the applicable service and/or distribution plan, the Funds may pay
distribution and/or service fees up to the following annual rates with respect to each Fund’s average daily net assets with respect
to such class (subject to the exceptions noted on page A-1):
■
Class A
shares: 0.25%
■
Class C
shares: 1.00%
■
Class P
shares: 0.10%
■
Class R
shares: 0.50%
■
Class S
shares: 0.15%
■
Invesco
Cash Reserve Shares: 0.15%
■
Investor
Class shares: 0.25%
Please
refer to the prospectus fee table for more information on a particular
Fund’s 12b-1 fees.
Initial
Sales Charges (Class A Shares Only)
The
Funds are grouped into six categories for determining initial sales charges. The “Other Information” section of each Fund’s
prospectus will tell you the sales charge category in which the Fund is classified. Additionally, Class A shares of Invesco Conservative
Income Fund and Invesco Short Term Municipal Fund do not have initial sales charges. As used below, the term “offering price”
with respect to all categories of Class A shares includes the initial sales charge.
If
you purchase $1,000,000 or more of Class A shares of Category I, II or
V Funds or $250,000 or more of Class A shares of Category IV or VI Funds (a Large Purchase) the initial sales charge set forth below will
be
A-3 The
Invesco Funds
waived; though
your shares will be subject to a 1% CDSC if you don’t hold such shares for at least 18 months.
|
Category
I Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
|
$250,000
but less than |
$500,000
|
2.75
|
2.83
|
|
| |||
|
$500,000
but less than |
$1,000,000
|
2.00
|
2.04
|
|
| |||
|
Category
III Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
1.00%
|
1.01%
|
|
| |||
|
$100,000
but less than |
$250,000
|
0.75
|
0.76
|
|
| |||
|
$250,000
but less than |
$1,000,000
|
0.50
|
0.50
|
|
| |||
|
Category
IV Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$100,000
|
2.50%
|
2.56%
|
|
| |||
|
$100,000
but less than |
$250,000
|
1.75
|
1.78
|
|
| |||
|
Category
VI Initial Sales Charges | |||
|
|
Investor’s
Sales Charge | ||
|
Amount
invested |
As
a % of
Offering
Price |
As
a % of
Investment
| |
|
Less
than |
$50,000
|
5.50%
|
5.82%
|
|
| |||
|
$50,000
but less than |
$100,000
|
4.50
|
4.71
|
|
| |||
|
$100,000
but less than |
$250,000
|
3.50
|
3.63
|
|
| |||
Class A
Shares Sold Without an Initial Sales Charge
The
availability of certain sales charge waivers and discounts will depend on how you purchase your shares. Intermediaries may have different
policies and procedures regarding the availability of front-end sales load waivers or contingent deferred (back-end) sales load (“CDSC”)
waivers, exchanges or conversions between classes or exchanges between Funds; account investment minimums; and minimum account balances,
which are
discussed below.
In all instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the
time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers, discounts or other special arrangements.
For waivers and discounts not available through a particular intermediary, shareholders should consult their financial advisor to consider
their options.
The
following types of investors may purchase Class A shares without paying
an initial sales charge:
Waivers
Offered by the Fund
■
Investors
who purchase shares through a fee-based advisory account with an approved financial intermediary. In a fee based advisory program, a financial
intermediary typically charges each investor a fee based on the value of the investor’s account in exchange for servicing that
account.
■
Employer
Sponsored Retirement and Benefit Plans maintained on retirement platforms or by the Funds’ transfer agent or its affiliates (but
not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder):
■
with
assets of at least $1 million; or
■
with
at least 100 employees eligible to participate in the plan; or
■
that
execute plan level or multiple-plan level transactions through a single omnibus account per Fund.
■
Any
investor who purchases his or her shares with the proceeds of an in kind rollover, transfer or distribution from a Retirement and Benefit
Plan where the account being funded by such rollover is to be maintained by the same financial intermediary, trustee, custodian or administrator
that maintained the plan from which the rollover distribution funding such rollover originated, or an affiliate thereof.
■
Investors
who own Investor Class shares of a Fund, who purchase Class A shares of a different Fund through the same account in which the Investor
Class Shares were first purchased.
■
Funds
of funds or other pooled investment vehicles.
■
Insurance
company separate accounts.
■
Any
current or retired trustee, director, officer or employee of any Invesco Fund or of Invesco Ltd. or any of its subsidiaries.
■
Any
registered representative or employee of any financial intermediary who has an agreement with Invesco Distributors to sell shares of the
Invesco Funds (this includes any members of his or her immediate family).
■
Any
investor purchasing shares through a financial intermediary that has a written arrangement with the Funds’ distributor in which
the Funds’ distributor has agreed to participate in a no transaction fee program in which the financial intermediary will make
Class A shares available without the imposition of a sales charge.
■
Former
shareholders of Atlas Strategic Income Fund who purchase shares of a Fund into which shareholders of Invesco Global Strategic Income Fund
may exchange if permitted by the intermediary’s policies.
■
Former
shareholders of Oppenheimer Total Return Fund Periodic Investment Plan who purchase shares of a Fund into which shareholders of Invesco
Main Street Fund may exchange if permitted by the intermediary’s policies.
■
Certain
participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company custodial accounts who were offered Class A shares without
an initial sales charge prior to December 15, 2023, and who continue to purchase Class A shares.
In
addition, investors may acquire Class A shares without paying an initial
sales charge in connection with:
■
reinvesting
dividends and distributions;
■
exchanging
shares of one Fund that were previously assessed a sales charge for shares of another Fund;
■
purchasing
shares in connection with the repayment of an Employer Sponsored Retirement and Benefit Plan loan administered by the Funds’ transfer
agent; and
■
purchasing
Class A shares with proceeds from the redemption of Class C, Class R, Class R5, Class R6 or Class Y shares where the
redemption and purchase are effectuated on the same business day due to the distribution of a Retirement and Benefit Plan maintained by
the Funds’ transfer agent or one of its affiliates.
A-4 The
Invesco Funds
Invesco
Distributors also permits certain other investors to invest in Class A
shares without paying an initial charge as a result of the investor’s current or former relationship with the Invesco Funds. For
additional information about such eligibility, please reference the Funds’ SAI.
Financial
Intermediary-Specific Arrangements
The
financial intermediary-specific waivers, discounts, policies regarding
exchanges and conversions, account investment minimums, minimum account balances, and share class eligibility requirements that follow
are only available to clients of those financial intermediaries specifically named below and to Invesco funds that offer the share class(es)
to which the arrangements relate. Please contact your financial intermediary for questions regarding your eligibility and for more information
with respect to your financial intermediary’s sales charge waivers, discounts, investment minimums, minimum account balances, and
share class eligibility requirements and other special arrangements. Financial intermediary-specific sales charge waivers, discounts,
investment minimums, minimum account balances, and share class eligibility requirements and other special arrangements are implemented
and administered by each financial intermediary. It is the responsibility of your financial intermediary (and not the Funds) to ensure
that you obtain proper financial intermediary-specific waivers, discounts, investment minimums, minimum account balances and other special
arrangements and that you are placed in the proper share class for which you are eligible through your financial intermediary. In all
instances, it is the purchaser’s responsibility to notify the Fund or the purchaser’s financial intermediary at the time
of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts or other financial intermediary-specific
arrangements as disclosed herein. Please contact your financial intermediary for more information regarding the sales charge waivers,
discounts, investment minimums, minimum account balances, share class eligibility requirements and other special arrangements available
to you and to ensure that you understand the steps you must take to qualify for such arrangements. The terms and availability of these
waivers and special arrangements may be amended or terminated at any time.
Ameriprise
Financial
The
following information applies to Class A shares purchases if you have
an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise
Financial retail brokerage account are eligible for the following
front-end sales charge waivers, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not
any other fund within the same fund family).
■
Shares
exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following
a shorter holding period, that waiver will apply.
■
Employees
and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
■
Shares
purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA
and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse
of a covered family member who is a lineal descendant.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e. Rights of Reinstatement).
D.A.
Davidson
&.
Co. (“D.A.
Davidson”)
Shareholders
purchasing fund shares including existing fund shareholders
through a D.A.
Davidson
platform or account, or through an introducing broker-dealer
or independent registered investment advisor for which D.A.
Davidson provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-End
Sales Charge Waivers on Class A Shares available at D.A.
Davidson
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
■
Employees
and registered representatives of D.A.
Davidson or its affiliates and their family members as designated
by D.A. Davidson.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as Rights of Reinstatement).
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is consistent with D.A.
Davidson’s policies and procedures.
■
CDSC
Waivers on Classes A and C shares available at D.A.
Davidson
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA or other qualifying retirement accounts as described in the fund’s prospectus
beginning in the calendar year the shareholder turns age 72.
■
Shares
acquired through a right of reinstatement.
■
Front-end
sales charge discounts available at D.A.
Davidson: breakpoints, rights of accumulation and/or letters
of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A.
Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at D.A. Davidson
may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
Edward
D.
Jones & Co., L.P.
(“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after December 15, 2023, the following information supersedes
prior information with respect to transactions and positions held in fund shares through an Edward Jones system. Clients of Edward Jones
(also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible
only for the following sales charge discounts (also referred to as “breakpoints”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of additional information (“SAI”) or through
another broker-dealer. In all instances, it is the shareholder's
A-5 The
Invesco Funds
responsibility
to inform Edward Jones at the time of purchase of any relationship, holdings of Invesco funds, or other facts qualifying the purchaser
for discounts or waivers. Edward Jones can ask for documentation of such circumstance. Shareholders should contact Edward Jones if they
have questions regarding their eligibility for these discounts and waivers.
■
Breakpoints
■
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in the prospectus.
■
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except certain money market
funds and any assets held in group retirement plans) of Invesco funds held by the shareholder or in an account grouped by Edward Jones
with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). If grouping assets as
a shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation.
Money market funds are included only if such shares were sold with a sales charge at the time of purchase or acquired in exchange for
shares purchased with a sales charge.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
■
ROA
is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
■
Letter
of Intent (“LOI”)
■
Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period
from the date Edward Jones receives the LOI.
The LOI is determined
by
calculating the higher of cost or market value
of qualifying holdings at LOI initiation in combination with
the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and any breakpoint
discounts.
Each purchase the shareholder makes during that 13-month
period will receive the sales charge and
breakpoint discount
that applies to the total amount.
The inclusion of eligible fund family assets in the LOI calculation
is dependent on the shareholder notifying Edward Jones of such assets at the time of calculation. Purchases made before the LOI is received
by Edward Jones are not adjusted under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if
LOI is not met.
■
If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for the IRA accounts associated
with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the employer.
■
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following situations:
■
Associates
of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by Edward Jones under its policies and
procedures) as the associate. This waiver will continue for the remainder of the associate's life if the associate retires from Edward
Jones in good-standing and remains in good standing pursuant to Edward Jones' policies and procedures.
■
Shares
purchased in an Edward Jones fee-based program.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment. Shares purchased from the proceeds of redeemed
shares of the same fund family so
long
as the following conditions are
met: the proceeds are from the sale of shares within 60 days
of the purchase, the sale and purchase
are made from a share
class that charges a
front load and one of the following:
●
The
redemption and repurchase occur in the same account.
●
The
redemption proceeds are used to process an: IRA contribution, excess contributions, conversion, recharacterizing of contributions, or
distribution, and the repurchase is done in an account within the same Edward Jones grouping for ROA.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of Edward Jones. Edward Jones is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject
to the applicable sales charge as disclosed in the prospectus.
■
Exchanges
from Class C shares to Class A shares of the same fund,
generally, in the 84th month following the anniversary of
the purchase date or
earlier at the discretion of Edward Jones.
■
Purchases
of Class 529-A shares through a rollover from either another
education savings plan or a security used for qualified distributions.
■
Purchases
of Class 529 shares made for recontribution of refunded amounts.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are redeemed before the CDSC is expired, the shareholder
is responsible to pay the CDSC except in the following conditions:
■
The
death or disability of the shareholder.
■
Systematic
withdrawals with up to 10% per
year of the account value.
■
Return
of excess contributions from an Individual Retirement Account (IRA).
■
Shares
redeemed as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
■
Shares
redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones.
■
Shares
exchanged in an Edward Jones fee-based program.
■
Shares
acquired through NAV reinstatement.
■
Shares
redeemed at the discretion of Edward Jones for Minimums Balances, as described below.
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
●
Initial
purchase minimum: $250
●
Subsequent
purchase minimum: none
Minimum
Balances
●
Edward
Jones has the right to redeem at its discretion
fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A
fee-based account held on an Edward Jones platform
○
A
529 account held on an Edward Jones platform
○
An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
●
At
any time it deems necessary, Edward Jones has the authority
to exchange at NAV
a shareholder's holdings in a fund to Class A shares of the
same fund.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing shares through a Janney brokerage
account will be eligible for the following load waivers (front-end sales charge waivers and contingent deferred sales charge (“CDSC”),
or back-end sales charge, waivers) and discounts, which may differ from those disclosed elsewhere in this fund’s Prospectus or
SAI.
■
Front-end
sales charge waivers on Class A shares available at Janney
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
A-6 The
Invesco Funds
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following
the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (i.e., right of reinstatement).
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs
or Keogh plans.
■
Shares
acquired through a right of reinstatement.
■
Class
C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures.
■
CDSC
waivers on Class A and C shares available at Janney
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching the qualified age
based on applicable IRS regulations as described in the fund’s Prospectus.
■
Shares
sold to pay Janney fees but only if the transaction is initiated by Janney.
■
Shares
acquired through a right of reinstatement.
■
Shares
exchanged into the same share class of a different fund.
■
Front-end
sales charge discounts available at Janney: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in the fund’s Prospectus.
■
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the
aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets
not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder
notifies his or her financial advisor about such assets.
J.P.
Morgan
Securities LLC
If
you purchase or hold fund shares through an applicable
J.P.
Morgan Securities LLC brokerage account,
you will be eligible for the following sales charge waivers
(front-end sales charge waivers and contingent deferred
sales charge (“CDSC”), or back-end sales charge,
waivers), share
class conversion policy and discounts, which may differ from those disclosed elsewhere in this fund’s prospectus or Statement of
Additional Information (“SAI”).
Front-end
sales charge waivers on Class A shares
available at J.P. Morgan Securities LLC
■
Shares
exchanged from Class C (i.e., level-load) shares that are no longer subject to a CDSC and are exchanged into Class A shares of the same
fund pursuant to J.P. Morgan Securities LLC’s share class exchange policy.
■
Qualified
employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred compensation plans,
other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs,
SAR-SEPs or 501(c)(3)
accounts.
■
Shares
of funds purchased through J.P. Morgan
Securities LLC Self-Directed Investing accounts.
■
Shares
purchased through rights of reinstatement.
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family).
■
Shares
purchased by employees and registered representatives of J.P.
Morgan Securities
LLC
or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan
Securities LLC.
Class
C to Class A share conversion
■
A
shareholder in the fund’s Class C shares will have their shares converted by J.P.
Morgan Securities LLC to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and the conversion is consistent with J.P.
Morgan Securities LLC’s policies and procedures.
CDSC
waivers on Class A and C Shares available
at J.P. Morgan Securities LLC
■
Shares
sold upon the death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Shares
purchased in connection with a return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal Revenue Code.
■
Shares
acquired through a right of reinstatement.
Front-end
load discounts available at J.P. Morgan
Securities LLC: breakpoints, rights of accumulation & letters of intent
■
Breakpoints
as described in the prospectus.
■
Rights
of Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as described in the fund’s prospectus
will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at J.P. Morgan
Securities LLC. Eligible
fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only if the shareholder notifies
their financial advisor about such assets.
Letters
of Intent (“LOI”) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
Merrill
Lynch
(“Merrill”)
Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform or account will be eligible
only for the following sales load waivers (front-end,
contingent deferred,
or back-end waivers) and discounts, which differ from those
disclosed elsewhere in this prospectus or SAI. Purchasers will have to buy mutual fund shares directly from the mutual fund company or
through another intermediary to be eligible for waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable
documentation of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill
Sales Load Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the Mutual Fund Investing at Merrill pamphlet
at ml.com/funds. Clients are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
■
Front-end
Load Waivers Available at Merrill
■
Shares
of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including
health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account
and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP
IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
■
Shares
purchased through a Merrill investment advisory program.
A-7 The
Invesco Funds
■
Brokerage
class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage
account.
■
Shares
purchased through the Merrill Edge Self-Directed platform.
■
Shares
purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account.
■
Shares
exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD
Supplement.
■
Shares
purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement).
■
Shares
purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees).
■
Shares
purchased from the proceeds of a mutual fund redemption
in front-end load shares provided (1) the repurchase is in
a mutual fund within the same fund family;
(2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement).
Automated transactions
(i.e.
systematic purchases and withdrawals) and purchases made
after shares
are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement.
■
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level Load Shares Available at Merrill
■
Shares
sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22(e)(3)).
■
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the
Merrill SLWD Supplement.
■
Shares
sold due to return of excess contributions from an IRA account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on
applicable IRS regulation.
■
Front-end
or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class
of the same mutual fund.
■
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoint
discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed
to a front-end load purchase, as described in the Merrill SLWD Supplement.
■
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated
holdings of mutual fund family assets held in accounts in their Merrill Household.
■
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within
a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement.
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan
Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and may be more limited than those
disclosed elsewhere in this Fund’s Prospectus or SAI.
■
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth Management
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase
pension
plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple
IRAs, SAR-SEPs
or Keogh plans;
■
Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules;
■
Shares
purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund;
■
Shares
purchased through a Morgan Stanley self-directed brokerage account;
■
Class
C (i.e.,
level-load)
shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program;
and
■
Shares
purchased from the proceeds of redemptions
within
the same fund family,
provided
(i)
the repurchase occurs within 90 days following the redemption,
(ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
Oppenheimer
& Co.
Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO
platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in this Fund's prospectus or SAI.
■
Front-end
Sales Load Waivers on Class A Shares available at OPCO
■
Employer-sponsored
retirement, deferred
compensation and employee benefit plans (including health savings accounts) and trusts used
to fund those plans,
provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the
plan
■
Shares
purchased by or through a 529 Plan
■
Shares
purchased through an OPCO affiliated investment advisory program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not
any other fund within the fund family)
■
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the same account,
and
(3)
redeemed shares were subject to a front-end or deferred sales
load (known
as Rights of Reinstatement).
■
A
shareholder in the Fund's Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share
class) of the Fund if the
shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
■
Employees
and registered representatives of OPCO or its affiliates and their family members
■
Directors
or Trustees of the Fund, and employees of the Fund's investment adviser or any of its affiliates, as described in this prospectus
■
CDSC
Waivers on A and C Shares available at OPCO
■
Death
or disability of the shareholder
■
Shares
sold as part of a systematic
withdrawal plan as described in the Fund's prospectus
■
Return
of excess contributions from an IRA Account
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the prospectus
■
Shares
sold to pay OPCO fees but only if the transaction is initiated by OPCO Shares acquired through a right of reinstatement
■
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
■
Breakpoints
as described in this prospectus.
■
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser's
A-8 The
Invesco Funds
household
at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets.
PFS
Investments Inc. (“PFSI”)
Policies
Regarding Transactions Through PFSI
The
following information supersedes all prior information with respect to
transactions and positions held in fund shares purchased through PFSI and held on the mutual fund platform of its affiliate, Primerica
Shareholder Services (“PSS”). Clients of PFSI (also referred to as “shareholders”) purchasing fund shares
on the PSS platform are eligible only for the following share classes, sales charge discounts (also referred to as “breakpoints”)
and waivers, which can differ from share classes, discounts and waivers described elsewhere in this prospectus or the related statement
of additional information (“SAI”) or through another broker-dealer. In all instances, it is the shareholder’s responsibility
to inform PFSI at the time of a purchase of all holdings of Invesco Funds on the PSS platform, or other facts qualifying the purchaser
for discounts or waivers. PFSI may request reasonable documentation of such facts, and condition the granting of any discount or waiver
on the timely receipt of such documents. Shareholders should contact PSS if they have questions regarding their eligibility for these
discounts and waivers.
Share
Classes
■
Class
A shares: in non-retirement accounts, individual retirement accounts (IRA), SEP IRAs, SIMPLE IRAs, Keogh Plans, and all other account
types unless expressly provided for below.
■
Class
C shares: only in accounts with existing Class C share holdings.
Breakpoints
■
Breakpoint
pricing at dollar thresholds as described in the prospectus of the fund you are purchasing.
Rights
of Accumulation (“ROA”)
■
The
applicable sales charge on a purchase of Class A shares is determined by taking into account all share classes (except any assets held
in group retirement plans) of Invesco Funds held by the shareholder on the PSS Platform. The inclusion of eligible fund family assets
in the ROA calculation is dependent on the shareholder notifying PFSI of such assets at the time of calculation. Shares of money market
funds are included only if such shares were acquired in exchange for shares of another Invesco Fund purchased with a sales charge. No
shares of Invesco Funds held by the shareholder away from the PSS platform will be granted ROA with shares of any Invesco Fund purchased
on the PSS platform.
■
Any
SEP IRA plan, any SIMPLE IRA plan or any Payroll Deduction plan (“PDP”) on the PSS platform will be defaulted to plan-level
grouping for purposes of ROA, which allows each participating employee ROA with all other eligible shares held in plan accounts on the
PSS platform. At any time, a participating employee may elect to exercise a one-time option to change grouping for purposes of ROA to
shareholder- level grouping, which allows the plan account of the electing employee ROA with her other eligible holdings on the PSS platform,
but not with all other eligible participant holdings in the plan. Eligible shares held in plan accounts electing shareholder-level grouping
will not be available for purposes of ROA to plan accounts electing plan-level grouping.
■
ROA
is determined by calculating the higher of cost minus redemptions or current market value (current shares x NAV).
Letter
of Intent (“LOI”)
■
By
executing a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month
period through PFSI, from the date PSS receives the LOI. The purchase price of the LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination with the dollar amount the shareholder intends to invest over
a 13-month period to arrive at total investment for purposes of determining any breakpoint discount and the applicable front-end sales
charge. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies
to the projected total investment.
■
Only
holdings of Invesco Funds on the PSS platform are eligible for inclusion in the LOI calculation and the shareholder must notify PFSI of
all eligible assets at the time of calculation.
■
Purchases
made before the LOI is received by PSS are not adjusted under the LOI, and the LOI will not reduce any sales charge previously paid. Sales
charges will be automatically adjusted if the total purchases required by the LOI are not met.
■
If
an employer maintaining a SEP IRA plan, SIMPLE IRA plan or non-IRA PDP on the PSS platform has elected to establish or change ROA for
the accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may only be established by the
employer. LOIs are not available to PDP IRA plans on the PSS platform with plan-level grouping for purposes of ROA, but are available
to any participating employee that elects shareholder-level grouping for purposes of ROA.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment.
■
Shares
purchased with the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are
from the sale of shares within 90 days of the purchase, 2) the sale and purchase are made in the same share class and the same account
or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account, and 3) the redeemed
shares were subject to a front-end or deferred sales load, Automated transactions (i.e. systematic purchases and withdrawals), full or
partial transfers or rollovers of retirement accounts, and purchases made after shares are automatically sold to pay account maintenance
fees are not eligible for this sales charge waiver.
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the discretion
of PFSI. PFSI is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
Policies
Regarding Fund Purchases Through PFSI That Are Not Held
on the PSS Platform
■
Class
R shares are available through PFSI only in 401(k) plans covering a business owner with no employees, commonly referred to as a one-participant
401(k) plan or solo 401(k).
Raymond
James Financial Services, Inc.
Shareholders
purchasing Fund shares through a Raymond
James Financial Services, Inc., Raymond James affiliates
and each entity’s affiliates (Raymond James) platform or account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund’s prospectus or SAI.
■
Front-end
sales load waivers on Class A shares available at Raymond James
■
Shares
purchased in an investment advisory program.
■
Shares
purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend distributions.
■
Employees
and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales load (known as Rights of Reinstatement).
A-9 The
Invesco Funds
■
A
shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate
share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures
of Raymond James.
■
CDSC
Waivers on Classes A and C shares available at Raymond James
■
Death
or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus.
■
Shares
sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
■
Shares
acquired through a right of reinstatement.
■
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at
Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor
about such assets.
■
Letters
of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible
fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies
his or her financial advisor about such assets.
Robert
W. Baird & Co. Incorporated (“Baird”)
Shareholders
purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge waivers (front-end sales charge waivers and CDSC waivers) and
discounts, which may differ from those disclosed elsewhere in this prospectus or the SAI.
■
Front-End
Sales Charge Waivers on Class A-shares Available at Baird
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund.
■
Shares
purchased by employees and registered representatives of Baird or its affiliate and their family members as designated by Baird.
■
Shares
purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred
sales charge (known as rights of reinstatement).
■
A
shareholder in the Fund’s Class C Shares will have their shares converted at net asset value to Class A shares of the fund if the
shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird.
■
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
CDSC
Waivers on Classes A and C shares Available at Baird
■
Shares
sold due to death or disability of the shareholder.
■
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in
the Fund’s prospectus.
■
Shares
sold to pay Baird fees but only if the transaction is initiated by Baird.
■
Shares
acquired through a right of reinstatement.
■
Front-End
Sales Charge Discounts Available at Baird: Breakpoints, Rights of Accumulation and/or letters of intent
■
Breakpoints
as described in this prospectus.
■
Rights
of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may
be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
■
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of within a fund family through Baird, over a 13-month period
of time.
Stifel,
Nicolaus & Company, Incorporated and its broker dealer
affiliates (“Stifel”)
Effective
December 15, 2023, shareholders purchasing or holding fund shares,
including existing fund shareholders, through a Stifel, Nicolaus & Company, Incorporated or affiliated platform that provides trade
execution, clearance, and/or custody services, will be eligible for the following sales charge load waivers (including front-end sales
charge waivers and contingent deferred, or back-end, (“CDSC”) sales charge waivers) and discounts, which may differ from
those disclosed elsewhere in the Fund’s Prospectus or SAI.
Class
A Shares
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through Stifel.
Rights
of Accumulation
■
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts on front-end sales charges will be calculated
by Stifel based on the aggregated holding of all assets in all classes of shares of Invesco funds held by accounts within the purchaser’s
household at Stifel. Eligible fund family assets not held at Stifel may be included in the calculation of ROA only if the shareholder
notifies his or her financial advisor about such assets.
■
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the IRA accounts associated with the
plan to a plan-level grouping as opposed to including all share classes at a shareholder or pricing group level.
Front-end
sales charge waivers on Class A shares available at Stifel
Sales
charges may be waived for the following shareholders and in the following
situations:
■
Class
C shares that have been held for more than seven (7) years
may be converted to Class A or other Front-end
share class(es) shares
of the same fund pursuant to Stifel's policies and procedures. To the extent that this prospectus elsewhere provides for a waiver with
respect to the exchange or conversion of such shares following a shorter holding period, those provisions shall continue to apply.
■
Shares
purchased by employees and registered representatives of Stifel or its affiliates and their family members as designated by Stifel
■
Shares
purchased in an Stifel fee-based advisory program, often referred to as a “wrap” program
■
Shares
purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same or other fund
within the fund family.
■
Shares
purchased from the proceeds of redeemed shares of the same fund family so long as the proceeds are from the sale of shares from an account
with the same owner/beneficiary within 90 days of the purchase. For the absence of doubt, shares redeemed through a Systematic Withdrawal
Plan are not eligible for rights of reinstatement.
■
Shares
from rollovers into Stifel from retirement plans to IRAs
■
Shares
exchanged into Class A shares from another share class so long as the exchange is into the same fund and was initiated at the direction
A-10 The
Invesco Funds
of
Stifel. Stifel is responsible for any remaining CDSC due to the fund company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus.
■
Purchases
of Class 529-A shares through a rollover from another 529 plan
■
Purchases
of Class 529-A shares made for reinvestment of refunded amounts
■
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and
defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Contingent
Deferred Sales Charges Waivers on Class A and C Shares
■
Death
or disability of the shareholder or, in the case of 529 plans, the account beneficiary
■
Shares
sold as part of a systematic withdrawal plan not to exceed 12% annually
■
Return
of excess contributions from an IRA Account.
■
Shares
sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations.
■
Shares
acquired through a right of reinstatement.
■
Shares
sold to pay Stifel fees or costs in such cases where the transaction is initiated by Stifel.
■
Shares
exchanged or sold in a Stifel fee-based program
■
All
other sales charge waivers and reductions described elsewhere in the fund’s prospectus or SAI still apply.
Share
Class Conversions in Advisory Accounts
■
Stifel
continually looks to provide our clients with the lowest cost share class available based on account type. Stifel reserves the right to
convert shares to the lowest cost share class available at Stifel upon transfer of shares into an advisory program.
UBS
Financial Services Inc. (“UBS”)
Pursuant
to an agreement with the Distributor, UBS may offer Class Y shares
to its retail brokerage clients whose shares are held in omnibus accounts at UBS, or its designee. For these clients, UBS may charge commissions
or transaction fees with respect to brokerage transactions in Class Y shares. The minimum investment for Class Y shares is waived for
transactions through such brokerage platforms at UBS. Please contact your UBS representative for more information about these fees and
other eligibility requirements.
Qualifying
for Reduced Sales Charges and Sales Charge Exceptions
In
all instances, it is the purchaser’s responsibility to notify Invesco Distributors or its designee of any relationship or other
facts qualifying the purchaser as eligible for reduced sales charges and/or sales charge exceptions and to provide all necessary documentation
of such facts in order to qualify for reduced sales charges or sales charge exceptions. For additional information on linking accounts
to qualify for ROA or LOI, please see the Funds’ SAI.
The
following types of accounts qualify for reduced sales charges or sales
charge exceptions under ROAs and LOIs:
1.
an
individual account owner;
2.
immediate
family of the individual account owner (which includes the individual’s spouse or domestic partner; the individual’s children,
step-children or grandchildren; the spouse or domestic partner of the individual’s children, step-children or grandchildren; the
individual’s parents and step-parents; the parents or step-parents of the individual’s spouse or domestic partner; the individual’s
grandparents; and the individual’s siblings);
3.
a
Retirement and Benefit Plan so long as the plan is established exclusively for the benefit of an individual account owner;
4.
a
Coverdell Education Savings Account (Coverdell ESA), maintained pursuant to Section 530 of the Code (in either case, the account
must be established by an individual account owner or have an individual account owner named as the beneficiary thereof); and
5.
certain
participants utilizing an Invesco 403(b)(7) Custodial Account who were granted ROA at the plan level (as described below) prior to December
15, 2023, and who continue to purchase Class A shares.
Alternatively,
an Employer Sponsored Retirement and Benefit Plan (but not
including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual custodial accounts thereunder) or Employer
Sponsored IRA may be eligible to purchase shares pursuant to a ROA at the plan level, and receive a reduced applicable initial sales charge
for a new purchase based on the total value of the current purchase and the value of other shares owned by the plan’s participants
if:
a)
the
employer or plan sponsor submits all contributions for all participating employees in a single contribution transmittal (the Invesco Funds
will not accept separate contributions submitted with respect to individual participants);
b)
each
transmittal is accompanied by checks or wire transfers; and
c)
the
Invesco Funds are expected to carry separate accounts in the names of each of the plan participants,
and each new participant account is established by submitting
an appropriate Account Application on behalf of each new participant with the contribution transmittal.
The
Fund's transfer agent may link new participant accounts in Employer
Sponsored Retirement and Benefit Plans (but not including plans utilizing the Invesco 403(b)(7) Custodial Account program, or the individual
custodial accounts thereunder) and Employer Sponsored IRAs at the plan level for ROA for the purpose of qualifying those participants
for lower initial sales charge rates.
Participant
accounts in a retirement plan that are eligible to purchase shares
pursuant to a ROA at the plan level may not also be considered eligible to do so for the benefit of an individual account owner.
Purchases
of Class A shares of Invesco Conservative Income Fund, Invesco
Government Money Market Fund and Invesco Short Term Municipal Fund, Class AX shares or Invesco Cash Reserve Shares of Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio, as applicable, or Investor Class shares of any Fund will not be taken into
account in determining whether a purchase qualifies for a reduction in initial sales charges pursuant to ROAs or LOIs.
Rights
of Accumulation
Purchasers
that qualify for ROA may combine new purchases of Class A shares of a Fund with shares of the Fund or other open-end Invesco Funds
currently owned (Class A, C, IB, IC, P, R, S or Y) for the purpose of qualifying for the lower initial sales charge rates that apply
to larger purchases. The applicable initial sales charge for the new purchase will be based on the total of your current purchase and
the value of other shares owned based on their current public offering price. The Funds’ transfer agent may automatically link
certain accounts registered in the same name with the same taxpayer identification number for the purpose of qualifying you for lower
initial sales charge rates.
Letters
of Intent
Under
a LOI, you commit to purchase a specified dollar amount of Class A shares of one or more Funds during a 13-month period. The amount
you agree to purchase determines the initial sales charge you pay. If the full amount committed to in the LOI is not invested by the end
of the 13-month period, your account will generally be assessed the higher initial sales charge that would normally be applicable to the
total amount actually invested. Shares equal in value to 5% of the intended purchase amount will be held in escrow for this purpose.
A-11 The
Invesco Funds
Reinstatement
Following Redemption
If you redeem any
class of shares of a Fund, you may reinvest all or a portion of the proceeds from the redemption (and may include that amount necessary
to acquire a fractional Share to round off his or her purchase to the next full Share) in the same share class of any Fund within 180
days of the redemption without paying an initial sales charge. Class P, S, and Y redemptions may be reinvested into Class A shares without
an initial sales charge.
This
reinstatement privilege does not apply to a purchase made through a
regularly scheduled automatic investment plan, such as a purchase by a regularly scheduled payroll deduction or transfer from a bank account.
This
reinstatement privilege shall be suspended for the period of time in which
a purchase block is in place on a shareholder’s account. Please see “Purchase Blocking Policy” discussed below.
In
order to take advantage of this reinstatement privilege, you must inform
your financial adviser or the Funds’ transfer agent that you wish to do so at the time of your reinvestment.
Contingent
Deferred Sales Charges (CDSCs)
CDSCs
on Class A Shares and Invesco Cash Reserve Shares
Any
shares of a Large Purchase of Class A shares redeemed prior to 18 months after the date of purchase will be subject to a CDSC of 1% with
the exception of Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal Fund which do not have CDSCs on redemptions.
If
Invesco Distributors pays a concession to a financial intermediary in connection
with a Large Purchase of Class A shares by an Employer Sponsored Retirement and Benefit Plan or SIMPLE IRA Plan, the Class A shares will
be subject to a 1% CDSC if all of the Employer Sponsored Retirement and Benefit Plan’s or SIMPLE IRA’s shares are redeemed
within one year from the date of initial purchase.
If
you acquire Invesco Cash Reserve Shares or Class A shares of Invesco
Government Money Market Fund or Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio through an exchange involving Class
A shares that were subject to a CDSC, the shares acquired as a result of the exchange will continue to be subject to that same CDSC.
CDSCs
on Class C Shares
Class
C shares are subject to a CDSC; however, the CDSC shall not apply to the purchases of Class C shares where the selling broker-dealer was
not paid a commission at the time of purchase. If you redeem your shares during the first year since your purchase has been made you will
be assessed a CDSC as disclosed in the “Fees and Expenses - Shareholder Fees” table in the prospectus, unless you qualify
for one of the CDSC exceptions outlined below.
CDSCs
on Class C Shares – Employer Sponsored Retirement and Benefit Plans and Employer Sponsored IRAs
Class
C shares are subject to a 1.00% CDSC at the time of redemption if all of the Employer Sponsored Retirement and Benefit Plan’s or
Employer Sponsored IRA’s shares are redeemed within one year from the date of initial purchase.
CDSCs
on Class C Shares of Invesco Short Term Bond Fund
Effective
November 1, 2021, Class C shares of Invesco Short Term Bond Fund are subject to a CDSC. If you acquire Class C shares of any other Fund
as a result of an exchange involving Class C shares of Invesco Short Term Bond Fund that were not subject to a CDSC prior to November
1, 2021, then the shares acquired as a result of the exchange will not be subject to a CDSC.
Computing
a CDSC
The
CDSC on redemptions of shares is computed based on the lower of their original purchase price or current net asset value, net of reinvested
dividends and capital gains distributions. In determining whether to charge a
CDSC, shares are
accounted for on a first-in, first-out basis, which means that you will redeem shares on which there is no CDSC first, and then shares
in the order of their purchase.
CDSC
Exceptions
Investors
who own shares that are otherwise subject to a CDSC will not pay a CDSC in the following circumstances:
■
If
you participate in the Systematic Redemption Plan and withdraw up to 12% of the value of your shares that are subject to a CDSC in any
twelve-month period.
■
If
you redeem shares to pay account fees.
■
If
you are the executor, administrator or beneficiary of an estate or are otherwise entitled to assets remaining in an account following
the death or post-purchase disability of a shareholder or beneficial owner and you choose to redeem those shares.
There
are other circumstances under which you may be able to redeem shares
without paying CDSCs. For additional information about such circumstances, please see the Appendix entitled “Purchase, Redemption
and Pricing of Shares” in each Fund’s SAI.
Shares
acquired through the reinvestment of dividends and distributions are
not subject to CDSCs.
The
following share classes are sold without a CDSC:
■
Class
A2 shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund
■
Class
A shares of Invesco Government Money Market Fund
■
Invesco
Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
■
Investor
Class shares of any Fund
■
Class
P shares of Invesco Summit Fund
■
Class
R5 and R6 shares of any Fund
■
Class
R shares of any Fund
■
Class
S shares of Invesco Charter Fund, Invesco Select Risk: Moderately Conservative Investor Fund, Invesco Select Risk: Growth Investor Fund,
Invesco Select Risk: Moderate Investor Fund and Invesco Summit Fund
■
Class
Y shares of any Fund
Purchasing
Shares and Shareholder Eligibility
Invesco
Premier U.S. Government Money Portfolio
For
Invesco Premier U.S. Government Money Portfolio, you may purchase shares using one of the options below. Unless the Fund closes early
on a business day, the Fund’s transfer agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a
business day and may accept a purchase order placed until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between
5:00 p.m. and 5:30 p.m. Eastern Time on a business day, you must place such order by telephone; however, the Fund’s transfer agent
reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes early on a business day, the Fund’s
transfer agent must receive your purchase order prior to such closing time. Purchase orders will not be processed unless the account application
and purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Fund
verifies and records your identifying information.
Invesco
Premier Portfolio
Only
accounts beneficially owned by natural persons will be permitted to retain their shares. The Fund has implemented policies and procedures
reasonably designed to limit all beneficial owners of the Fund to natural persons, and investments in the Fund are limited to accounts
beneficially owned by natural persons. Natural persons may invest in the Fund through certain tax-advantaged savings accounts, trusts
and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual
retirement accounts; simplified employee pension arrangements; simple retirement accounts; custodial accounts; deferred compensation plans
for government or tax-exempt organization employees; Archer medical savings accounts; college savings
A-12 The
Invesco Funds
plans; health savings
account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts with ultimate investment
authority held by the natural person beneficial owner, notwithstanding having an institutional decision maker making day-to-day decisions
(e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Further,
financial intermediaries may only submit purchase orders if they have
implemented policies and procedures reasonably designed to limit all investors on behalf of whom they submit orders to accounts beneficially
owned by natural persons. Financial intermediaries may be required to provide a written statement or other representation that they have
in place, and operate in compliance with, such policies and procedures prior to submitting purchase orders. Such policies and procedures
may include provisions for the financial intermediary to promptly report to the Fund or the transfer agent the identification of any shareholder
of the Fund that does not qualify as a natural person of whom they are aware and promptly take steps to redeem any such shareholder’s
shares of the Fund upon request by the Fund or the transfer agent, in such manner as it may reasonably request. The Fund may involuntarily
redeem any such shareholder who does not voluntarily redeem their shares.
Natural
persons may purchase shares using one of the options below. For
all classes of the Fund, other than Investor Class shares, unless the Fund closes early on a business day, the Fund’s transfer
agent will generally accept any purchase order placed until 5:00 p.m. Eastern Time on a business day and may accept a purchase order placed
until 5:30 p.m. Eastern Time on a business day. If you wish to place an order between 5:00 p.m. and 5:30 p.m. Eastern Time on a business
day, you must place such order by telephone; or send your request by a pre-arranged Liquidity Link data transmission however, the Fund’s
transfer agent reserves the right to reject or limit the amount of orders placed during this time. For Investor Class shares of the Fund,
unless the Fund closes early on a business day, the Fund’s transfer agent will generally accept any purchase order placed until
4:00 p.m. Eastern Time on a business day and may accept a purchase order placed until 4:30 p.m. Eastern Time on a business day. If you
wish to place an order between 4:00 p.m. and 4:30 p.m. Eastern Time on a business day, you must place such order by telephone; however,
the Fund’s transfer agent reserves the right to reject or limit the amount of orders placed during this time. If the Fund closes
early on a business day, the Fund’s transfer agent must receive your purchase order prior to such closing time. Purchase orders
will not be processed unless the account application and purchase payment are received in good order. In accordance with the USA PATRIOT
Act, if you fail to provide all the required information requested in the current account application, your purchase order will not be
processed. Additionally, federal law requires that the Fund verify and record your identifying information.
There
are no minimum investments for Class P or S shares for fund accounts. The minimum investments for Class A, C, R, Y, Investor Class and
Invesco Cash Reserve shares for fund accounts are as follows:
|
Type
of Account |
Initial
Investment
Per
Fund |
Additional
Investments
Per
Fund |
|
Asset
or fee-based accounts managed by your financial
adviser
|
None
|
None
|
|
| ||
|
Employer
Sponsored Retirement and Benefit Plans and
Employer
Sponsored IRAs |
None
|
None
|
|
| ||
|
IRAs
and Coverdell ESAs if the new investor is
purchasing
shares through a systematic purchase plan |
$25
|
$25
|
|
| ||
|
All
other accounts if the investor is purchasing shares
through
a systematic purchase plan |
50
|
50
|
|
| ||
|
IRAs
and Coverdell ESAs |
250
|
25
|
|
| ||
|
All
other accounts |
1,000
|
50
|
|
| ||
Invesco
Distributors or its designee has the discretion to accept orders on behalf of clients for lesser amounts.
The
minimum investments for Class R5 and R6 shares are as follows:
There
is no minimum initial investment for an Employer Sponsored Retirement
and Benefit Plan investing through a retirement platform that administers at least $2.5 billion in retirement plan assets. All other Employer
Sponsored Retirement and Benefit Plans must meet a minimum initial investment of at least $1 million in each Fund in which it invests.
The
minimum initial investment in each share class for all other institutional
investors is $1 million, unless such investment is made by (i) an investment company, as defined under the 1940 Act, as amended, that
is part of a family of investment companies which own in the aggregate at least $100 million in securities, or (ii) an account established
with a 529 college savings plan managed by Invesco, in which case there is no minimum initial investment.
There
are no minimum investment amounts for Class R6 shares held through
retail omnibus accounts where the intermediary:
■
generally
charges an asset-based fee or commission in addition to those described in this prospectus; and
■
maintains
Class R6 shares and makes them available to retail investors.
A
financial intermediary may impose different investment minimums than
those set forth above. The Fund is not responsible for any investment minimums imposed by financial intermediaries or for notifying shareholders
of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other Financial Intermediary-Specific
Arrangements” for more information on certain intermediary-specific investment minimums. Please consult with your financial intermediary
if you have any questions regarding their policies.
How
to Purchase Shares*
|
|
Opening
An Account |
Adding
To An Account |
|
Through
a
Financial
Adviser
or
Financial
Intermediary*
|
Contact
your financial adviser or
financial
intermediary. |
Contact
your financial adviser or
financial
intermediary. |
|
By
Mail |
Mail
completed account application
and
check to the Funds’ transfer
agent,
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078.
The
Funds’ transfer agent does NOT
accept
the following types of
payments:
Credit Card Checks,
Temporary/Starter
Checks, Third
Party
Checks, and Cash. |
Mail
your check and the remittance
slip
from your confirmation
statement
to the Funds’ transfer
agent.
The Funds’ transfer agent
does
NOT accept the following
types
of payments: Credit Card
Checks,
Temporary/Starter Checks,
Third
Party Checks, and Cash. |
|
By
Wire* |
Mail
completed account application
to
the Funds’ transfer agent. Call
the
Funds’ transfer agent at (800)
959-4246
to receive a reference
number.
Then, use the wire
instructions
provided below. |
Call
the Funds’ transfer agent to
receive
a reference number. Then,
use
the wire instructions provided
below.
|
|
Wire
Instructions |
||
|
By
Telephone* |
Open
your account using one of the
methods
described above. |
The
Bank Account Information
option
on your completed account
application
or complete a
Systematic
Options and Bank
Information
Form. Mail the
application
or form to the Funds’
transfer
agent. Once the Funds’
transfer
agent has received the
form,
call the Funds’ transfer agent
at
the number below to place your
purchase
order. For Class R5 and
R6
shares, call the Funds’ transfer
agent
at (800) 959-4246 and wire
payment
for your purchase order in
accordance
with the wire
instructions
listed above. |
A-13 The
Invesco Funds
|
|
Opening
An Account |
Adding
To An Account |
|
Automated
Investor
Line |
Open
your account using one of the
methods
described above. |
Call
the Funds’ transfer agent’s
24-hour
Automated Investor Line at
1-800-246-5463.
You may place
your
order after you have provided
the
bank instructions that will be
requested.
|
|
By
Internet |
Open
your account using one of the
methods
described above. |
Access
your account at
www.invesco.com/us.
The proper
bank
instructions must have been
provided
on your account. You may
not
purchase shares in Retirement
and
Benefit Plans on the internet. |
|
*Class
R5 and R6 shares may only be purchased through a financial intermediary or by
telephone
at (800) 959-4246. | ||
Non-retirement
retail investors, including high net worth investors investing
directly or through a financial intermediary, are not eligible for Class R5 shares. IRAs and Employer Sponsored IRAs are also not eligible
for Class R5 shares. If you hold your shares through a financial intermediary, the terms by which you purchase, redeem and exchange shares
may differ than the terms in this prospectus depending upon the policies and procedures of your financial intermediary.
Purchase
orders will not be processed unless the account application and
purchase payment are received in good order. In accordance with the USA PATRIOT Act, if you fail to provide all the required information
requested in the current account application, your purchase order will not be processed. Additionally, federal law requires that the Funds
verify and record your identifying information.
Systematic
Purchase Plan (Available for all classes except Class R5 and R6 shares)
You
can arrange for periodic investments in any of the Funds by authorizing the Funds’ transfer agent to withdraw the amount of your
investment from your bank account on a day or dates you specify and in an amount of at least $25 per Fund for IRAs and Coverdell ESAs,
and at least $50 per Fund for all other types of accounts (a Systematic Purchase Plan). You may stop the Systematic Purchase Plan at any
time by giving the Funds’ transfer agent notice ten days prior to your next scheduled withdrawal. Certain financial advisers and
other financial intermediaries may also offer systematic purchase plans.
Dollar
Cost Averaging (Available for all classes except Class R5 and R6 shares)
Dollar
Cost Averaging allows you to make automatic periodic exchanges, if permitted, from one Fund to another Fund or multiple other Funds. The
account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur
on (or about) the day of the month you specify, in the amount you specify. Dollar Cost Averaging cannot be set up for the 29th through
the 31st of the month. The minimum amount you can exchange to another Fund is $50. Your financial intermediary may offer alternative dollar
cost averaging programs with different requirements.
Automatic
Dividend and Distribution Investment
Your
dividends and distributions may be paid in cash or reinvested in the same Fund or another Fund without paying an initial sales charge.
Unless
you specify otherwise, your dividends and distributions will automatically
be reinvested in the same Fund. You must comply with the following requirements to be eligible to invest your dividends and distributions
in shares of another Fund:
■
Your
account balance in the Fund paying the dividend or distribution must be at least $5,000; and
■
Your
account balance in the Fund receiving the dividend or distribution must be at least $500.
If
you elect to receive your distributions by check, and the distribution amount
is $25 or less, then the amount will be automatically reinvested in the same Fund and no check will be issued. If you have elected to
receive distributions by check, and the postal service is unable to deliver checks to
your address of
record, then your distribution election may be converted to having all subsequent distributions reinvested in the same Fund and no checks
will be issued. With respect to certain account types, if your check remains uncashed for six months, the Fund generally reserves the
right to reinvest your distribution check in your account at the then applicable NAV and to reinvest all subsequent distributions in shares
of the Fund. Such checks will be reinvested into the same share class of the Fund. You should contact the Funds’ transfer agent
to change your distribution option, and your request to do so must be received by the Funds’ transfer agent before the record date
for a distribution in order to be effective for that distribution. No interest will accrue on amounts represented by uncashed distribution
checks.
Redeeming
Shares*
The
Funds’ transfer agent or authorized intermediary, if applicable, must receive your call before the Funds’ net asset value
determination (as defined by the applicable Fund) in order to effect the redemption at that day’s net asset value.
Your
broker or financial intermediary may charge service fees for handling
redemption transactions.
|
How
to Redeem Shares | |
|
Through
a Financial
Adviser
or Financial
Intermediary*
|
Contact
your financial adviser or financial intermediary. The Funds’
transfer
agent must receive your financial adviser’s or financial
intermediary’s
call before the Funds’ net asset value determination
(as
defined by the applicable Fund) in order to effect the redemption
at
that day’s net asset value. Please contact your financial adviser or
financial
intermediary with respect to reporting of cost basis and
available
elections for your account. |
|
By
Mail |
Send
a written request to the Funds’ transfer agent which includes: |
|
|
▪ Original
signatures of all registered owners/trustees;
▪ The
dollar value or number of shares that you wish to redeem;
▪ The
name of the Fund(s) and your account number;
▪ The
cost basis method or specific shares you wish to redeem for
tax
reporting purposes, if different than the method already on
record;
and |
|
|
▪ Signature
guarantees, if necessary (see below).
The
Funds’ transfer agent may require that you provide additional
documentation,
or information, such as corporate resolutions or
powers
of attorney, if applicable. If you are redeeming from a
Retirement
and Benefit Plan, you must complete the appropriate
distribution
form. |
|
By
Telephone* |
Call
the Funds’ transfer agent at 1-800-959-4246. You will be
allowed
to redeem by telephone if:
▪ Your
redemption proceeds are to be mailed to your address on
record
(and there has been no change in your address of record
within
the last 15 days) or transferred electronically to a
pre-authorized
checking account;
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have not previously declined the telephone redemption
privilege.
|
|
|
You
may, in limited circumstances, initiate a redemption from an
Invesco
IRA by telephone. Redemptions from Employer Sponsored
Retirement
and Benefit Plans and Employer Sponsored IRAs may be
initiated
only in writing and require the completion of the appropriate
distribution
form, as well as employer authorization. You must call the
Funds’
transfer agent before the Funds’ net asset value
determination
(as defined by the applicable Fund) in order to effect
the
redemption at that day’s net asset value. |
|
Automated
Investor Line |
Call
the Funds’ transfer agent’s 24-hour Automated Investor Line at
1-800-246-5463.
You may place your redemption order after you
have
provided the bank instructions that will be requested. |
A-14 The
Invesco Funds
|
How
to Redeem Shares | |
|
By
Internet |
Place
your redemption request at www.invesco.com/us. You will be
allowed
to redeem by Internet if:
▪ You
can provide proper identification information;
▪ Your
redemption proceeds do not exceed $250,000 per Fund; and
▪ You
have already provided proper bank information.
Redemptions
from Employer Sponsored Retirement and Benefit
Plans
and Employer Sponsored IRAs may be initiated only in writing
and
require the completion of the appropriate distribution form, as
well
as employer authorization. |
|
*Class
R5 and R6 shares may only be redeemed through a financial intermediary or by
telephone
at (800) 959-4246. | |
Timing
and Method of Payment
The Funds’
transfer agent typically expects to pay redemption proceeds to redeeming shareholders within one business day after a redemption request
is received in good order, regardless of the method a Fund uses to make such payment. However, a Fund may take up to seven days to process
a redemption request. “Good order” means that all necessary information and documentation related to the redemption request
have been provided to the Funds’ transfer agent or authorized intermediary, if applicable. If your request is not in good order,
the Funds’ transfer agent may require additional documentation in order to redeem your shares. If you redeem shares recently purchased
by check or ACH, you may be required to wait up to ten calendar days before your redemption proceeds are sent. This delay is necessary
to ensure that the purchase has cleared. You can avoid the check hold period if you pay for your shares with a certified check, a cashier’s
check or a federal wire. Payment may be postponed under unusual circumstances, as allowed by the SEC, such as when the NYSE restricts
or suspends trading.
In
addition, a temporary hold may be placed on the disbursement of redemption
proceeds from an account if there is a reasonable belief that financial exploitation of a Specified Adult (as defined below) has occurred,
is occurring, has been attempted, or will be attempted. Notice of such a delay will be provided in accordance with regulatory requirements.
This temporary hold will be for an initial period of no more than 15 business days while an internal review is performed. Should the internal
review support the belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted, the temporary
hold may be extended for up to 10 additional business days. Both the initial and subsequent hold on the disbursement may be terminated
or extended by a state regulator or an agency or court of competent jurisdiction. For purposes of this paragraph, the term “Specified
Adult” refers to an individual who is (a) a natural person age 65 and older, or (b) a natural person age 18 and older who is reasonably
believed to have a mental or physical impairment that renders the individual unable to protect his or her own interests.
If
you redeem by telephone, the Funds’ transfer agent will transmit the amount
of redemption proceeds electronically to your pre-authorized bank account. Redemption checks are mailed to your address of record, via
first class U.S. mail, unless you make other arrangements with the Funds’ transfer agent.
The
Funds’ transfer agent uses reasonable procedures to confirm that instructions
communicated via telephone and the Internet are genuine, and the Funds and the Funds’ transfer agent are not liable for losses
arising from actions taken in accordance with instructions that are reasonably believed to be genuine.
A
Fund typically expects to use holdings of cash and cash equivalents and
sales of portfolio assets to meet redemption requests, both regularly and in stressed market conditions. The Funds also have the ability
to redeem in kind as further described below under “Redemptions in Kind.” Certain Funds have a line of credit, as disclosed
in such Funds’ principal investment strategy and risk disclosures that may be used to meet redemptions in stressed market conditions.
Expedited
Redemptions (for Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio only)
If
you place your redemption order by telephone, before 11:30 a.m. Eastern Time and request an expedited redemption, the Funds’ transfer
agent will
transmit payment
of redemption proceeds on that same day via federal wire to a bank of record on your account. If the Funds’ transfer agent receives
your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, it will transmit
payment on the next business day.
Suspension
of Redemptions
The right of redemption
may be suspended or the date of payment postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations
of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension,
or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable. With respect to Invesco Government Money Market Fund, Invesco U.S. Government Money Portfolio, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, in the event that the Fund, at the end of a business day, has invested
less than 10% of its total assets in weekly liquid assets or, with respect to the retail and government money market funds, the Fund’s
price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest 1%, has deviated from the
stable price established by the Fund’s Board of Trustees (“Board”) or the Board, including a majority of trustees
who are not interested persons as defined in the 1940 Act, determines that such a deviation is likely to occur, and the Board, including
a majority of trustees who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Fund’s
Board has the authority to suspend redemptions of Fund shares.
Liquidity
Fees
As
“Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund, Invesco Premier U.S. Government Portfolio
and Invesco U.S. Government Money Portfolio are not subject to discretionary liquidity fees on fund redemptions which might apply to other
types of funds. In conformance with Rule 2a-7, the Board has reserved its ability to change this policy with respect to discretionary
liquidity fees, but such change would only become effective after shareholders were provided with specific advance notice of a change
in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy change became
effective.
For
Invesco Premier Portfolio, the Adviser
(as the Board’s delegate)
may impose liquidity fees of up to 2% of the value of the
shares redeemed, if such fee is determined to be in the best interest of the Fund.
Liquidity
fees are most likely to be imposed, if at all, during times
of extraordinary market stress. In the event that a liquidity fee is imposed, the Board expects that for the duration of its implementation
and the day after which such fee is terminated, the Fund would strike only one net asset value (“NAV”) per day, at the Fund’s
last scheduled NAV calculation time.
The
imposition and termination of a liquidity fee will be available
on the Fund’s website. If a liquidity fee is applied by the Adviser (as the Board’s delegate), it will be charged on all
redemption orders submitted after the effective time of the imposition of the fee by the Adviser. Liquidity fees would reduce the amount
you receive upon redemption of your shares.
The
Adviser (as
the Board’s delegate) may,
in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of a Fund. When a fee is
in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which may
include affirmation of the purchaser’s knowledge that a fee is in effect. When a fee is in place, shareholders will not be permitted
to exchange into or out of a Fund.
There
is some degree of uncertainty with respect to the tax treatment of liquidity
fees received by a Fund, and such tax treatment may be the subject to future IRS guidance. If a Fund receives liquidity fees, it will
consider the appropriate tax treatment of such fees to the Fund at such time. Liquidity fees will generally be used to assist a Fund to
help preserve its market–based NAV per share. It is possible that a liquidity fee will be returned to shareholders in the form
of a distribution.
Financial
intermediaries are required to promptly take the steps requested
by the Funds or their designees to impose or help to implement,
A-15 The
Invesco Funds
modify,
or remove a liquidity fee as requested from time to time,
including the rejection of orders due to the imposition of a fee or the prompt re-confirmation of orders following a notification regarding
the implementation of a fee. If a liquidity fee is imposed, these steps are expected to include the submission of separate purchase and
redemption orders (on a gross basis), rather than combined purchase and redemption orders (on a net basis), from the time of the effectiveness
of the liquidity fee and the submission of order information to the Fund or its designee prior to the next calculation of a Fund’s
NAV, including information on orders received in good order and eligible to receive a price computed on a day on which the Fund imposes
a liquidity fee. Unless otherwise agreed to between a Fund and financial intermediary, the Fund will withhold liquidity fees on behalf
of financial intermediaries. A redemption request that a Fund determines in its sole discretion has been received in good order by the
Fund or its designated agent prior to the imposition of a liquidity fee may be paid by the Fund without the deduction of a liquidity fee.
If a liquidity fee is imposed during the day, an intermediary who receives both purchase and redemption orders from a single account holder
is not required to net the purchase and redemption orders. However, the intermediary is permitted to apply the liquidity fee to the net
amount of redemptions (even if the purchase order was received prior to the time the liquidity fee was imposed).
Where
a Financial Intermediary serves as a Fund’s agent for the purpose
of receiving orders, trades that are not transmitted to the Fund by the Financial Intermediary before the time required by the Fund or
the transfer agent may, in the Fund’s discretion, be processed on an as-of basis, and any cost or loss to the Fund or transfer
agent or their affiliates, from such transactions shall be borne exclusively by the Financial Intermediary.
Systematic
Withdrawals (Available for all classes except Class R5 and R6 shares)
You
may arrange for regular periodic withdrawals from your account in amounts equal to or greater than $50 per Fund. The Funds’ transfer
agent will redeem the appropriate number of shares from your account to provide redemption proceeds in the amount requested. You must
have a total account balance of at least $5,000 in order to establish a Systematic Redemption Plan, unless you are establishing a Required
Minimum Distribution for a Retirement and Benefit Plan. You can stop this plan at any time by giving ten days’ prior notice to
the Funds’ transfer agent.
Check
Writing
The
Funds’ transfer agent has previously provided check writing privileges for accounts in the following Funds and share classes:
■
Invesco
Government Money Market Fund, Invesco Cash Reserve Shares, Class AX shares, Class Y shares and Investor Class shares
■
Invesco
U.S. Government Money Portfolio, Invesco Cash Reserve Shares and Class Y shares
■
Invesco
Premier Portfolio, Investor Class shares
■
Invesco
Premier U.S. Government Money Portfolio, Investor Class shares
Effective
August 28,
2023,
the Funds’
transfer agent no longer accepts Check
Writing authorization
forms and, effective
December 31,
2023,
the Fund’s transfer agent ceased
accepting checks as a valid form of redemption.
Check
writing privileges are not available for Retirement and Benefit Plans.
Checks are not eligible to be converted to ACH by the payee. You may not give authorization to a payee by phone to debit your account
by ACH for a debt owed to the payee.
If
you do not have a sufficient number of shares in your account to cover
the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it
is not possible to determine your account’s value in advance, you should not write a check for the entire value of your account
or try to close your account by writing a check.
Signature
Guarantees
The
Funds’ transfer agent requires a signature guarantee in the following circumstances:
■
When
your redemption proceeds exceed $250,000 per Fund.
■
When
you request that redemption proceeds be paid to someone other than the registered owner of the account.
■
When
you request that redemption proceeds be sent somewhere other than the address of record or bank of record on the account.
■
When
you request that redemption proceeds be sent to a new address or an address that changed in the last 15 days.
The
Funds’ transfer agent will accept a guarantee of your signature by a number
of different types of financial institutions. Call the Funds’ transfer agent for additional information. Some institutions have
transaction amount maximums for these guarantees. Please check with the guarantor institution to determine whether the signature guarantee
offered will be sufficient to cover the value of your transaction request.
Redemptions
in Kind
Although
the Funds generally intend to pay redemption proceeds solely in cash, the Funds reserve the right to determine, in their sole discretion,
whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). Redemptions
in kind may result in transaction costs and/or market fluctuations associated with liquidating or holding the securities, respectively.
Purchases-in-Kind
You
may purchase shares of a Fund by transferring securities to a Fund in exchange for Fund shares (“in-kind purchases”). In-kind
purchases may be made only upon the Funds’ approval and determination that the securities are acceptable investments for the Fund
and are purchased consistent with the Fund’s procedures relating to in-kind purchases. The Funds reserve the right to amend or
terminate this practice at any time. You must call the Funds at (800) 959-4246 before sending any securities. Please see the SAI for additional
details.
Redemptions
by Large Shareholders
At
times, the Fund may experience adverse effects when certain large shareholders redeem large amounts of shares of the Fund. Large redemptions
may cause the Fund to sell portfolio securities at times when it would not otherwise do so. In addition, these transactions may also accelerate
the realization of taxable income to shareholders (if applicable) if such sales of investments resulted in gains and may also increase
transaction costs and/or increase in the Fund’s expense ratio. When experiencing a redemption by a large shareholder, the Fund
may delay payment of the redemption request up to seven days to provide the investment manager with time to determine if the Fund can
redeem the request-in-kind or to consider other alternatives to lessen the harm to remaining shareholders. Under certain circumstances,
however, the Fund may be unable to delay a redemption request, which could result in the automatic processing of a large redemption that
is detrimental to the Fund and its remaining shareholders.
Redemptions
Initiated by the Funds
If
your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months,
and the value of your account falls below $500 for three consecutive months for any reason, including market fluctuation, the Funds have
the right to redeem the account after giving you 60 days’ prior written notice. You may avoid having your account redeemed during
the notice period by bringing the account value up to $500 or by initiating a Systematic Purchase Plan.
A
financial intermediary may have a different policy regarding redemptions
of accounts with small balances. The Fund is not responsible for any small account balance policies imposed by financial intermediaries
or for notifying shareholders of any changes to them. See “Waivers Available Through Certain Financial Intermediaries and Other
Financial Intermediary-Specific Arrangements” for more information on certain intermediary-specific small account balance policies.
Please consult with your financial intermediary if you have any questions regarding their policies.
If
a Fund determines that you have not provided a correct Social Security
or other tax identification number on your account application, or
A-16 The
Invesco Funds
the Fund is not
able to verify your identity as required by law, the Fund may, at its discretion, redeem the account and distribute the proceeds to you.
In
order to separate retail investors (natural persons) and non-retail investors,
the Invesco Premier Portfolio reserve the right to redeem shares in any account that the Funds cannot confirm to their satisfaction are
beneficially owned by natural persons. The Funds will provide advance written notice of their intent to make any such involuntary redemptions.
The Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural
persons, after providing advance notice.
Neither
a Fund nor its investment adviser will be responsible for any loss
in an investor’s account or tax liability resulting from an involuntary redemption.
Minimum
Account Balance
A
low balance fee of $12 per year (the Low Balance Fee) may be deducted annually from all accounts held in the Funds (each a Fund Account)
with a value less than $750 (the Low Balance Amount).
The Low Balance Fee and Low Balance Amount are determined
by the Funds and the Adviser, and may be adjusted for any year depending on various factors, including market conditions. The Low Balance
Fee, Low Balance Amount and the date on which the Low Balance Fee will be deducted from any Fund Account will be posted on our website,
www.invesco.com/us, on or about November 1 of each year. This fee is collected by the Funds' transfer agent by redeeming sufficient shares
from the shareholder's Fund Account,
and is used to reduce the expenses that would otherwise be
payable by the Funds to the Funds' transfer agent under the Funds'
agreement with the transfer agent.
The
Low Balance Fee and Low Balance Amount do not apply to Fund Accounts
held in a Retirement and Benefit Plan for which an Invesco Affiliate acts as the plan document provider or custodian for underlying participant
or IRA accounts. However, for purposes of all other Retirement and Benefit Plans, the Low Balance Fee and Low Balance Amount shall apply
to each Fund Account (as appropriate) that is maintained by the Funds' transfer agent in the underlying participant or IRA Account.
The
Funds and the Adviser reserve the right to waive the Low Balance Fee,
change the Low Balance amount or modify the conditions for assessment of the Low Balance Fee at any time.
Exchanging
Shares
You
may, under certain circumstances, exchange shares in one Fund for those of another Fund. An exchange is the purchase of shares in one
Fund which is paid for with the proceeds from a redemption of shares of another Fund effectuated on the same day. Any gain on the transaction
may be subject to federal income tax. Accordingly, the procedures and processes applicable to redemptions of Fund shares, as discussed
under the heading “Redeeming Shares” above, will apply. Before requesting an exchange, review the prospectus of the Fund
you wish to acquire.
All
exchanges are subject to the limitations set forth in the prospectuses of
the Funds. If you wish to exchange shares of one Fund for those of another Fund, you must consult the prospectus of the Fund whose shares
you wish to acquire to determine whether the Fund is offering shares to new investors and whether you are eligible to acquire shares of
that Fund.
Permitted
Exchanges
Except
as otherwise provided herein or in the SAI, you generally may exchange your shares for shares of the same class of another Fund. The following
table shows generally permitted exchanges from one Fund to another Fund (exceptions listed below under “Exchanges Not Permitted”):
|
Exchange
From |
Exchange
To |
|
Invesco
Cash Reserve Shares |
Class
A, C, R, Investor Class |
|
| |
|
Class
A |
Class
A, Investor Class, Invesco Cash Reserve Shares* |
|
| |
|
Class
A2 |
Class
A, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Class
AX |
Class
A, AX, Investor Class, Invesco Cash Reserve Shares |
|
| |
|
Investor
Class |
Class
A, Investor Class |
|
| |
|
Class
P |
Class
A, Invesco Cash Reserve Shares |
|
| |
|
Exchange
From |
Exchange
To |
|
Class
S |
Class
A, S, Invesco Cash Reserve Shares |
|
| |
|
Class
C |
Class
C* |
|
| |
|
Class
CX |
Class
C, CX |
|
| |
|
Class
R |
Class
R* |
|
| |
|
Class
R5 |
Class
R5 |
|
| |
|
Class
R6 |
Class
R6 |
|
| |
|
Class
Y |
Class
Y* |
|
*
You may exchange Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C
or
R shares of any other Fund as long as you are otherwise eligible for such share class. If you
exchange
Class Y shares of Invesco U.S. Government Money Portfolio for Class A, C or R shares
of
any other Fund, you may exchange those Class A, C or R shares back into Class Y shares of
Invesco
U.S. Government Money Portfolio, but not Class Y shares of any other Fund. | |
Exchanges
into Invesco Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund
Invesco
Senior Loan Fund and Invesco Dynamic Credit Opportunity Fund (the “Interval Funds”) are closed-end interval funds that continuously
offer their shares pursuant to the terms and conditions of their prospectuses. The Adviser is the investment adviser for the Interval
Funds. As with the Invesco Funds, you generally may exchange your shares of any Invesco Fund for the same class of shares of the Interval
Funds. Please refer to the prospectuses for the Interval Funds for more information, including the share classes offered by each Interval
Fund and limitations on exchanges out of the Interval Funds.
Exchanges
Not Permitted
The
following exchanges are not permitted:
■
Investor
Class shares cannot be exchanged for Class A shares of any Fund which offers Investor Class shares.
■
Class A2
shares of Invesco Short Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund cannot be exchanged for Class A shares
of those Funds.
■
Invesco
Cash Reserve Shares cannot be exchanged for Class C or R shares if the shares being exchanged were acquired by exchange from Class A
shares of any Fund.
■
All
existing systematic exchanges and reallocations will cease and these options will no longer be available on all 403(b) prototype plans.
■
Class
A, C or R shares of a Fund acquired by exchange of Class Y shares of Invesco U.S. Government Money Portfolio cannot be exchanged for Class
Y shares of any Fund, except Class Y shares of Invesco U.S. Government Money Portfolio.
Exchange
Conditions
Shares
must have been held for at least one day prior to the exchange with the exception of dividends and distributions that are reinvested.
Under
unusual market conditions, a Fund may delay the exchange of shares
for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds.
The exchange privilege is not an option or right to purchase shares. Any of the participating Funds or the distributor may modify or terminate
this privilege at any time.
Initial
Sales Charges, CDSCs and 12b-1 Fees Applicable to Exchanges
You
may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you
are exchanging. If you exchange into shares that are subject to a CDSC, the Funds’ transfer agent will begin the holding period
for purposes of calculating the CDSC on the date you made your initial purchase.
In
addition, as a result of differences in the forms of distribution plans among
the Funds, certain exchanges of Class A shares, Class C shares, and Class R shares of a Fund for the same class of shares of another Fund
may result in investors paying a higher or a lower 12b-1 fee on the Fund being exchanged into. Please refer to the prospectus fee table
and financial highlights table and the SAI for more information on the fees and expenses, including applicable 12b-1 fees, of the Fund
you wish to acquire.
A-17 The
Invesco Funds
Share
Class Conversions
Shares of one class
of a Fund may be converted into shares of another class of the same Fund, provided that you are eligible to buy that share class. Investors
who hold Fund shares through a financial intermediary that does not have an agreement to make certain share classes of the Funds available
or that cannot systematically support the conversion may not be eligible to convert their shares. Furthermore, your financial intermediary
may have discretion to effect a conversion on your behalf. Consult with your financial intermediary for details. Any CDSC associated with
the converting shares will be assessed immediately prior to the conversion to the new share class. The conversion of shares of one class
of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes and no gain or loss will be reported
on the transaction. See the applicable prospectus for share class information.
Fees
and expenses differ between share classes. You should read the prospectus
for the share class into which you are seeking to convert your shares prior to the conversion.
Automatic
Conversion of Class C and Class CX Shares
Class
C and Class CX shares held for eight years after purchase are eligible for automatic conversion into Class A and Class AX shares of the
same Fund, respectively, except that for the Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, the Funds’
Class C and/or Class CX shares would be eligible to automatically convert into the Fund’s Invesco Cash Reserve Share Class and
all existing Class C shares of Invesco Short Term Municipal Fund will automatically convert to Class A shares of that Fund at the end
of June 2022 (the Conversion Feature). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of
the month following the eighth anniversary after a purchase of Class C or Class CX shares (the Conversion Date). The first conversion
of Class C and Class CX shares to Class A and Class AX shares under this policy would occur at the end of December 2020 for all Class
C and Class CX shares that were held for more than eight years as of November 30, 2020.
Automatic
conversions pursuant to the Conversion Feature will be on the
basis of the NAV per share, without the imposition of any sales charge (including a CDSC), fee or other charge. All such automatic conversions
of Class C and Class CX shares will constitute tax-free exchanges for federal income tax purposes.
Class
C and Class CX shares of a Fund acquired through a reinvestment of
dividends and distributions will convert to Class A and Class AX shares, respectively, of the Fund (or Invesco Cash Reserve shares for
Invesco Government Money Market Fund) on the Conversion Date pro rata with the converting Class C and Class CX shares of that Fund that
were not acquired through reinvestment of dividends and distributions.
Class
C or Class CX shares held through a financial intermediary in existing
omnibus Employer Sponsored Retirement and Benefit Plans and other omnibus accounts may be converted pursuant to the Conversion Feature
by the financial intermediary once it is determined that the Class C or Class CX shares have been held for the required holding period.
It is the financial intermediary’s (and not the Fund’s) responsibility to keep records and to ensure that the shareholder
is credited with the proper holding period as the Fund and its agents may not have transparency into how long a shareholder has held Class
C or Class CX shares for purposes of determining whether such Class C or Class CX shares are eligible to automatically convert pursuant
to the Conversion Feature. In order to determine eligibility for automatic conversion in these circumstances, it is the responsibility
of the shareholder or their financial intermediary to determine that the shareholder is eligible to exercise the Conversion Feature, and
the shareholder or their financial intermediary may be required to maintain records that substantiate the holding period of Class C or
Class CX shares.
In
addition, a financial intermediary may sponsor and/or control programs
or platforms that impose a different conversion schedule or eligibility requirements for conversions of Class C or Class CX shares. In
these cases, Class C and Class CX shares of certain shareholders may not
be eligible for
automatic conversion pursuant to the Conversion Feature as described above. The Fund has no responsibility for overseeing, monitoring
or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for
automatic conversion. Please consult with your financial intermediary if you have any questions regarding the Conversion Feature.
Share
Class Conversions Not Permitted
The
following share class conversions are not permitted:
■
Conversions
into Class A from Class A2 of the same Fund.
■
Conversions
into Class A2, Class AX, Class CX, Class P or Class S of the same Fund.
Rights
Reserved by the Funds
Each
Fund and its agents reserve the right at any time to:
■
Reject
or cancel all or any part of any purchase or exchange order.
■
Modify
any terms or conditions related to the purchase, redemption or exchange of shares of any Fund.
■
Reject
or cancel any request to establish a Systematic Purchase Plan or Systematic Redemption Plan.
■
Modify
or terminate any sales charge waivers or exceptions.
■
Suspend,
change or withdraw all or any part of the offering made by this prospectus.
Excessive
Short-Term Trading Activity (Market Timing) Disclosures
While
the Funds provide their shareholders with daily liquidity, their investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading
activity in the Funds’ shares (i.e., a purchase of Fund shares followed shortly thereafter by a redemption of such shares, or vice
versa) may hurt the long-term performance of certain Funds by requiring them to maintain an excessive amount of cash or to liquidate portfolio
holdings at a disadvantageous time, thus interfering with the efficient management of such Funds by causing them to incur increased brokerage
and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices
for portfolio securities, the value of Fund shares held by long-term investors may be diluted. The Board has adopted policies and procedures
designed to discourage excessive or short-term trading of Fund shares for all Funds except the money market funds, Invesco Conservative
Income Fund, and Invesco Short Term Municipal Fund. However, there is the risk that these Funds’ policies and procedures will prove
ineffective in whole or in part to detect or prevent excessive or short-term trading. These Funds may alter their policies at any time
without prior notice to shareholders if the Adviser believes the change would be in the best interests of long-term shareholders.
Invesco
and certain of its corporate affiliates (Invesco and such affiliates,
collectively, the Invesco Affiliates) currently use the following tools designed to discourage excessive short-term trading in the retail
Funds:
■
Trade
activity monitoring.
■
Discretion
to reject orders.
■
Purchase
blocking.
■
The
use of fair value pricing consistent with the valuation policy approved by the Board and related procedures.
Each
of these tools is described in more detail below. Although these tools
are designed to discourage excessive short-term trading, you should understand that none of these tools alone nor all of them taken together
eliminate the possibility that excessive short-term trading activity in the Funds will occur. Moreover, each of these tools involves judgments
that are inherently subjective. Invesco Affiliates seek to make these judgments to the best of their abilities in a manner that they believe
is consistent with long-term shareholder interests.
Money
Market Funds. The Boards of Invesco Government Money Market
Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio (the money
market funds) have not adopted any policies and procedures that would limit frequent purchases and redemptions of such Funds’ shares.
The Boards of
A-18 The
Invesco Funds
the money market
funds considered the risks of not having a specific policy that limits frequent purchases and redemptions, and determined that those risks
were minimal. Nonetheless, to the extent that a money market fund must maintain additional cash and/or securities with short-term durations
in greater amounts than may otherwise be required or borrow to honor redemption requests, the money market fund’s yield could be
negatively impacted.
The
Boards of the money market funds do not believe that it is appropriate
to adopt any such policies and procedures for the money market funds for the following reasons:
■
The
money market funds are offered to investors as cash management vehicles; therefore, investors should be able to purchase and redeem shares
regularly and frequently.
■
One
of the advantages of a money market fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity
of the money market funds will be detrimental to the continuing operations of such Funds.
■
With
respect to the money market funds maintaining a constant net asset value, the money market funds’ portfolio securities are valued
on the basis of amortized cost, and such Funds seek to maintain a constant net asset value. As a result, the money market funds are not
subject to price arbitrage opportunities.
■
With
respect to the money market funds maintaining a constant net asset value, because such Funds seek to maintain a constant net asset value,
investors are more likely to expect to receive the amount they originally invested in the Funds upon redemption than other mutual funds.
Invesco
Conservative Income Fund. The Board of Invesco Conservative
Income Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Conservative Income Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of the Invesco Conservative Income Fund does not believe that
it is appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is offered to investors as a cash management vehicle; investors perceive an investment in the Fund as an alternative to cash and
must be able to purchase and redeem shares regularly and frequently.
■
One
of the advantages of the Fund as compared to other investment options is liquidity. Any policy that diminishes the liquidity of the Fund
will be detrimental to the continuing operations of the Fund.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs.
The
Fund and its agent reserve the right at any time to reject or cancel any
part of any purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Invesco
Short Term Municipal Fund. The Board of Invesco Short Term
Municipal Fund has not adopted any policies and procedures that would limit frequent purchases and redemptions of such Fund’s shares.
The Board of Invesco Short Term Municipal Fund considered the risks of not having a specific policy that limits frequent purchases and
redemptions, and determined that those risks were minimal, especially in light of the reasons for not having such a policy as described
below. Nonetheless, to the extent that the Fund must maintain additional cash and/or securities with short-term durations in greater amounts
than may otherwise be required or borrow to honor redemption requests, the Fund’s yield could be negatively impacted.
The
Board of Invesco Short Term Municipal Fund does not believe that it is
appropriate to adopt any such policies and procedures for the Fund for the following reasons:
■
The
Fund is designed to address the needs of retail investors who seek liquidity in their investment and seek the ability to purchase and
redeem shares at any time.
■
Any
policy that diminishes the ability of shareholders to purchase and redeem shares of the Fund will be detrimental to the continuing operations
of the Fund.
■
The
Fund generally invests in short duration liquid investment grade municipal securities.
Excessive
trading activity in the Fund’s shares may cause the Fund to incur
increased brokerage and administrative costs. The Fund and its agent reserve the right at any time to reject or cancel any part of any
purchase order. This could occur if the Fund determines that such purchase may disrupt the Fund’s operation or performance.
Trade
Activity Monitoring
Invesco
Affiliates monitor selected trades on a daily basis in an effort to detect excessive short-term trading activities. If, as a result of
this monitoring, Invesco Affiliates believe that a shareholder has engaged in excessive short-term trading, they will seek to act in a
manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking
the shareholder to take action to stop such activities or (ii) refusing to process future purchases or exchanges related to such activities
in the shareholder’s accounts other than exchanges into a money market fund. Invesco Affiliates will use reasonable efforts to
apply the Funds’ policies uniformly given the practical limitations described above.
The
ability of Invesco Affiliates to monitor trades that are made through accounts
that are maintained by intermediaries (rather than the Funds’ transfer agent) and through conduit investment vehicles may be limited
or non-existent.
Discretion
to Reject Orders
If
a Fund or an Invesco Affiliate determines, in its sole discretion, that your short-term trading activity is excessive, the Fund may, in
its sole discretion, reject any additional purchase and exchange orders. This discretion may be exercised with respect to purchase or
exchange orders placed directly with the Funds’ transfer agent or through a financial intermediary.
Purchase
Blocking Policy
The
Funds (except those listed below) have adopted a policy under which any shareholder redeeming shares having a value of $50,000 or more
from a Fund on any trading day will be precluded from investing in that Fund for 30 calendar days after the redemption transaction date.
The policy applies to redemptions and purchases that are part of exchange transactions. Under the purchase blocking policy, certain purchases
will not be prevented and certain redemptions will not trigger a purchase block, such as: purchases and redemptions of shares having a
value of less than $50,000; systematic purchase, redemption and exchange account options; transfers of shares within the same Fund; non-discretionary
rebalancing in fund-of-funds; asset allocation features; fee-based accounts; account maintenance fees; small balance account fees; plan-level
omnibus Retirement and Benefit Plans; death and disability and hardship distributions; loan transactions; transfers of assets; Retirement
and Benefit Plan rollovers; IRA conversions and re-characterizations; and mandatory distributions from Retirement and Benefit Plans.
The
Funds reserve the right to modify any of the parameters (including those
not listed above) of the purchase blocking policy at any time. Further, the purchase blocking policy may be waived with respect to specific
shareholder accounts in those instances where the Adviser determines that its surveillance procedures are adequate to detect frequent
trading in Fund shares.
If
an account is maintained by a financial intermediary whose systems are
unable to apply Invesco’s purchase blocking policy, the Adviser will accept the establishment of an account only if the Adviser
believes the policies and procedures are reasonably designed to enforce the frequent trading policies of the Funds. You should refer to
disclosures provided by the financial intermediary with which you have an account to determine the specific trading restrictions that
apply to you. If the Adviser identifies any
A-19 The
Invesco Funds
activity that may
constitute frequent trading, it reserves the right to contact the intermediary and request that the intermediary either provide information
regarding an account owner’s transactions or restrict the account owner’s trading. There is no guarantee that all instances
of frequent trading in Fund shares will be prevented.
The
purchase blocking policy does not apply to Invesco Conservative Income
Fund, Invesco Short Term Municipal Fund, Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government
Money Portfolio and Invesco U.S. Government Money Portfolio.
Pricing
of Shares
Determination
of Net Asset Value
The
price of each Fund’s shares is the Fund’s net asset value per share. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value portfolio
securities for which market quotations are readily available at market value. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day. The Funds (except Invesco Government Money Market Fund,
Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio) value securities
and assets for which market quotations are unavailable at their “fair value,” which is described below. Invesco Government
Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio and Invesco U.S. Government Money Portfolio
value portfolio securities on the basis of amortized cost, which approximates market value. This method of valuation is designed to enable
a Fund to price its shares at $1.00 per share. The Funds cannot guarantee their net asset value will always remain at $1.00 per share.
Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
The Fund values securities and assets for which market quotations are unavailable at their “fair value,” which is described
below.
Even
when market quotations are available, they may be stale or not representative
of market value in the Adviser’s judgment (“unreliable”) because the security is not traded frequently, trading on
the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because
of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the Fund calculates
its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or
insolvency, events that affect a geographical area or an industry segment, such as political events or natural disasters, or market events,
such as a significant movement in the U.S. market. Where the Adviser determines that the closing price of the security is stale or unreliable,
the Adviser will value the security at its fair value.
A
fair value price is an estimated price that requires consideration of all appropriate
factors, including indications of fair value available from pricing services. Fair value pricing involves judgment and a Fund that uses
fair value methodologies may value securities higher or lower than another Fund using market quotations or its own fair value methodologies
to price the same securities. Investors who purchase or redeem Fund shares on days when the Fund is holding fair-valued securities may
receive a greater or lesser number of shares, or higher or lower redemption proceeds, than they would have received if the Fund had not
fair-valued the security or had used a different methodology.
The
Board has designated the Adviser to perform the daily determination
of fair value prices in accordance with Board approved policies and related procedures, subject to the Board’s oversight. Fair
value pricing methods and pricing services can change from time to time.
The
intended effect of applying fair value pricing is to compute an NAV that
accurately reflects the value of a Fund’s portfolio at the time that the NAV is calculated. An additional intended effect is to
discourage those seeking to take advantage of arbitrage opportunities resulting from “stale” prices and to mitigate the
dilutive impact of any such arbitrage. However, the application of fair value pricing cannot eliminate the possibility that arbitrage
opportunities will exist.
Specific
types of securities are valued as follows:
Senior
Secured Floating Rate Loans and Senior Secured Floating Rate Debt
Securities. Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using evaluated quotes provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as market quotes, ratings, tranche type, industry, company performance,
spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
Domestic
Exchange Traded Equity Securities. Market quotations are
generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable,
the Adviser will value the security at fair value in good faith using the valuation policy approved by the Board and related procedures.
Foreign
Securities. 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 are significant and may make the
closing price unreliable, the Fund may fair value the security. If an issuer specific event has occurred that the Adviser determines,
in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The Adviser
also relies on a screening process from a pricing vendor 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 market value as of the close of the NYSE. For foreign
securities where the Adviser believes, at the approved degree of certainty, that the price is not reflective of current market value,
the Adviser will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor,
pricing methodology or degree of certainty may change from time to time.
Fund
securities primarily traded on foreign markets may trade on days that
are not business days of the Fund. Because the net asset value of Fund shares is determined only on business days of the Fund, the value
of the portfolio securities of a Fund that invests in foreign securities may change on days when you will not be able to purchase or redeem
shares of the Fund.
Fixed
Income Securities. Fixed income securities, such as government,
corporate, asset-backed and municipal bonds, convertible securities, including high yield or junk bonds, and loans, generally are valued
on the basis of prices provided by independent pricing services. Prices provided by the pricing services 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 special securities, dividend rate, maturity and other market data. Pricing services generally value fixed income securities
assuming orderly transactions of institutional round lot size, but a Fund may hold or transact in the same securities in smaller, odd
lot sizes. Odd lots often trade at lower prices than institutional round lots. Prices received from pricing services are fair value prices.
In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the Adviser will fair value the
security using the valuation policy approved by the Board and related procedures.
Short-term
Securities. The
Funds (except
as noted below)
value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The Funds that
operate as government money market or retail money market funds value all of their securities at amortized cost.
Futures
and Options. Futures contracts are valued at the final settlement
price set by the exchange on which they are principally traded. Where
a final settlement price exists, exchange traded options
are valued at the final settlement price from the exchange where the option principally trades. When
a final settlement price does not exist, exchange traded
options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options
not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
A-20 The
Invesco Funds
Rights
and Warrants. Non-traded rights and warrants shall be valued
at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio.
Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then
adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used
based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise
period from verified terms.
Swap
Agreements. Swap Agreements are fair valued using an evaluated
quote provided by a clearing house or an independent pricing service. Evaluated quotes provided by the pricing service are based on a
model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end
Funds. If a Fund invests in other open-end funds, other than
open-end funds that are exchange traded, the investing Fund will calculate its net asset value using the net asset value of the underlying
fund in which it invests, and the prospectuses for such open-end funds explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing.
Each
Fund, except for Invesco Government Money Market Fund, Invesco Premier
Portfolio and Invesco Premier U.S. Government Money Portfolio, generally determines the net asset value of its shares on each day the
NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each Fund, except for Invesco Government
Money Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, generally still will determine the net
asset value of its shares as of 4:00 p.m. Eastern Time on that business day. Portfolio securities traded on the NYSE would be valued at
their closing prices unless the Adviser determines that a “fair value” adjustment is appropriate due to subsequent events
occurring after an early close consistent with the valuation policy approved by the Board and related procedures. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio will generally determine the net asset
value of their shares at 5:30 p.m. Eastern Time on each business day. A business day for Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio is any day that (1) both the Federal Reserve Bank of New York and
a Fund’s custodian are open for business and (2) the primary trading markets for the Fund’s portfolio instruments are open
and the Fund’s management believes there is an adequate market to meet purchase and redemption requests. Invesco Government Money
Market Fund, Invesco Premier Portfolio and Invesco Premier U.S. Government Money Portfolio are authorized not to open for trading
on a day that is otherwise a business day if the Securities Industry and Financial Markets Association (SIFMA) recommends that government
securities dealers not open for trading; any such day will not be considered a business day. Invesco Government Money Market Fund, Invesco
Premier Portfolio and Invesco Premier U.S. Government Money Portfolio, Invesco U.S. Government Money Portfolio also may close early
on a business day if SIFMA recommends that government securities dealers close early. If Invesco Government Money Market Fund, Invesco
Premier Portfolio or Invesco Premier U.S. Government Money Portfolio uses its discretion to close early on a business day, the Fund
will calculate its net asset value as of the time of such closing Invesco Premier Portfolio and Invesco U.S. Government Money Portfolio
are authorized to not open for trading on a day that is otherwise a business day if the NYSE recommends that government securities dealers
not open for trading; any such day will not be considered a business day. Invesco Premier Portfolio also may close early on a business
day if the NYSE recommends that government securities dealers close early.
For
financial reporting purposes and shareholder transactions on the last
day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions
in the normal course of business (other than shareholder transactions at a fiscal period-end), each Fund’s portfolio securities
transactions are recorded no later than the first business day following the trade date.
The
Invesco Advantage International Fund, Invesco Balanced-Risk Allocation
Fund, Invesco Balanced-Risk Commodity Strategy Fund, Invesco Floating Rate ESG Fund, Invesco Fundamental Alternatives Fund, Invesco Global
Allocation Fund, Invesco Global Strategic Income Fund, Invesco Gold & Special Minerals Fund, Invesco International Bond Fund, Invesco
Macro Allocation Strategy Fund and Invesco Senior Floating Rate Fund may each invest up to 25% of their total assets in shares of their
respective subsidiaries (the Subsidiaries). The Subsidiaries offer to redeem all or a portion of their shares at the current net asset
value per share every regular business day. The value of shares of the Subsidiaries will fluctuate with the value of the respective Subsidiary’s
portfolio investments. The Subsidiaries price their portfolio investments pursuant to the same pricing and valuation methodologies and
procedures used by the Funds, which require, among other things, that each of the Subsidiaries’ portfolio investments be marked-to-market
(that is, the value on each of the Subsidiaries’ books changes) each business day to reflect changes in the market value of the
investment.
Each
Fund’s current net asset value per share is made available on the Funds’
website at www.invesco.com/us.
Fair
Value Pricing
Securities
owned by a Fund (except Invesco Government Money Market Fund, Invesco Premier Portfolio, Invesco Premier U.S. Government Money Portfolio
and Invesco U.S. Government Money Portfolio) are to be valued at current market value if market quotations are readily available. All
other securities and assets of a Fund for which market quotations are not readily available are to be valued at fair value determined
in good faith consistent with the valuation policy approved by the Board and related procedures. An effect of fair value pricing may be
to reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially “stale”
prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
The
price a Fund could receive upon the sale of any investment may differ
from the Adviser's valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair
valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions
(i.e., publicly traded company multiples, growth rate, time to exit), to determine a methodology that will result in a valuation that
the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value
from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and
the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the
investment.
Timing
of Orders
Each
Fund prices purchase, exchange and redemption orders at the net asset value next calculated by the Fund after the Fund’s transfer
agent, authorized agent or designee receives an order in good order for the Fund. Purchase, exchange and redemption orders must be received
prior to the close of business on a business day, as defined by the applicable Fund, to receive that day’s net asset value. Any
applicable sales charges are applied at the time an order is processed.
Currently,
certain financial intermediaries may serve as agents for the Funds
and accept orders on their behalf. Where a financial intermediary serves as agent, the order is priced at the Fund’s net asset
value next calculated after it is accepted by the financial intermediary. In such cases, if requested by a Fund, the financial intermediary
is responsible for providing information with regard to the time that such order for purchase, redemption or exchange was received. Orders
submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at
the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts
it, which may not occur on the day submitted to the financial intermediary.
A-21 The
Invesco Funds
Additional
Information Regarding Deferred Tax Liability (only applicable to the Invesco Steelpath Funds)
In calculating
the Fund’s daily NAV, the Fund will, among other things, account for its deferred tax liability and/or asset balances. As a result,
any deferred tax liability and/or asset is reflected in the Fund’s daily NAV.
The
Fund will accrue a deferred income tax liability balance, at the U.S. federal
corporate income tax rate plus an estimated state and local income tax rate for its future tax liability associated with MLP distributions
considered to be a return of capital, as well as for its future tax liability associated with the capital appreciation of its investments.
The Fund’s current and deferred tax liability, if any, will depend upon the Fund’s net investment gains and losses and realized
and unrealized gains and losses on investments and therefore may vary greatly from year to year depending on the nature of the Fund’s
investments, the performance of those investments and general market conditions. Any deferred tax liability balance will reduce the Fund’s
NAV. Upon the Fund’s sale of an MLP security, the Fund may be liable for previously deferred taxes.
The
Fund will accrue, in accordance with generally accepted accounting principles,
a deferred tax asset balance, which reflects an estimate of the Fund’s future tax benefit associated with net operating losses
and unrealized losses. Any deferred tax asset balance will increase the Fund’s NAV. To the extent the Fund has a deferred tax asset
balance, the Fund will assess, in accordance with generally accepted accounting principles, whether a valuation allowance, which would
offset the value of the Fund’s deferred tax asset balance, is required. Pursuant to Financial Accounting Standards Board Accounting
Standards Codification 740 (FASB ASC 740), the Fund will assess a valuation allowance to reduce the deferred tax asset balance if, based
on the weight of all available evidence, both negative and positive, it is more likely than not that the deferred tax asset balance will
not be realized. The Fund will use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence will be commensurate with the extent to which such evidence can be objectively
verified. The Fund’s assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
the duration of statutory carry forward periods and the associated risk that operating loss and capital loss carry forwards may be limited
or expire unused, and unrealized gains and losses on investments. Consideration is also given to market cycles, the severity and duration
of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. The Fund will assess whether a valuation
allowance is required to offset any deferred tax asset balance in connection with the calculation of the Fund’s NAV per share each
day; however, to the extent the final valuation allowance differs from the estimates the Fund used in calculating the Fund’s daily
NAV, the application of such final valuation allowance could have a material impact on the Fund’s NAV.
The
Fund’s deferred tax asset and/or liability balances are estimated using
estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. The Fund will rely to some
extent on information provided by MLPs in determining the extent to which distributions received from MLPs constitute a return of capital,
which may not be provided to the Fund on a timely basis, to estimate the Fund’s deferred tax liability and/or asset balances for
purposes of financial statement reporting and determining its NAV. If such information is not received from such MLPs on a timely basis,
the Fund will estimate the extent to which distributions received from MLPs constitute a return of capital based on average historical
tax characterization of distributions made by MLPs. The Fund’s estimates regarding its deferred tax liability and/or asset balances
are made in good faith; however, the daily estimate of the Fund’s deferred tax liability and/or asset balances used to calculate
the Fund’s NAV could vary dramatically from the Fund’s actual tax liability. Actual income tax expense, if any, will be
incurred over many years, depending on if and when investment gains and losses are realized, the then-current basis of the Fund’s
assets and other factors. As a result, the determination of the Fund’s actual tax liability may have a material impact on the Fund’s
NAV. The Fund’s daily NAV calculation will be based on then current estimates and assumptions regarding the Fund’s deferred
tax
liability and/or
asset balances and any applicable valuation allowance, based on all information available to the Fund at such time. From time to time,
the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation
allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax
liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related
guidance or interpretations thereof, limitations imposed on net operating losses (if any) and changes in applicable tax law could result
in increases or decreases in the Fund’s NAV per share, which could be material.
Taxes
(applicable to all Funds except for the Invesco SteelPath Funds)
A
Fund intends to qualify each year as a regulated investment company (RIC) and, as such, is not subject to entity-level tax on the income
and gain it distributes to shareholders. If you are a taxable investor, dividends and distributions you receive from a Fund generally
are taxable to you whether you reinvest distributions in additional Fund shares or take them in cash. Every year, you will be sent information
showing the amount of dividends and distributions you received from a Fund during the prior calendar year. In addition, investors in taxable
accounts should be aware of the following basic tax points as supplemented below where relevant:
Fund Tax
Basics
■
A
Fund earns income generally in the form of dividends or interest on its investments. This income, less expenses incurred in the operation
of a Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor,
distributions of net investment income generally are taxable to you as ordinary income.
■
Distributions
of net short-term capital gains are taxable to you as ordinary income. A Fund with a high portfolio turnover rate (a measure of how frequently
assets within a Fund are bought and sold) is more likely to generate short-term capital gains than a Fund with a low portfolio turnover
rate.
■
Distributions
of net long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your Fund shares.
■
A
portion of income dividends paid by a Fund to you may be reported as qualified dividend income eligible for taxation by individual shareholders
at long-term capital gain rates, provided certain holding period requirements are met. These reduced rates generally are available for
dividends derived from a Fund’s investment in stocks of domestic corporations and qualified foreign corporations. In the case of
a Fund that invests primarily in debt securities, either none or only a nominal portion of the dividends paid by the Fund will be eligible
for taxation at these reduced rates.
■
The
use of derivatives by a Fund may cause the Fund to realize higher amounts of ordinary income or short-term capital gain, distributions
from which are taxable to individual shareholders at ordinary income tax rates rather than at the more favorable tax rates for long-term
capital gain.
■
Distributions
declared to shareholders with a record date in October, November or December—if paid to you by the end of January—are taxable
for federal income tax purposes as if received in December.
■
Any
long-term or short-term capital gains realized on the sale or redemption of your Fund shares will be subject to federal income tax. For
tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An exchange occurs when the purchase of shares
of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds and, for shares acquired on or
after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the Internal Revenue Service (IRS).
Cost basis will be calculated using the Fund’s default method of average cost, unless you instruct the Fund to use a different
calculation method. As a service to you, the Fund will continue to provide to you (but not the IRS) cost basis information for shares
acquired before 2012, when available, using the average cost method. Shareholders should carefully review the cost basis
A-22 The
Invesco Funds
information
provided by a Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on
their federal income tax returns. If you hold your Fund shares through a broker (or other nominee), please contact that broker (nominee)
with respect to reporting of cost basis and available elections for your account. For more information about the cost basis methods offered
by Invesco, please refer to the Tax Center located under the Account Access & Forms menu of our website at www.Invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income or undistributed capital gains.
A subsequent distribution to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in
a Fund just before it declares an income dividend or capital gains distribution is sometimes known as “buying a dividend.”
In addition, a Fund’s net asset value may, at any time, reflect net unrealized appreciation, which may result in future taxable
distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
An
additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts
to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount. This Medicare tax, if applicable, is reported by
you on, and paid with, your federal income tax return.
■
You
will not be required to include the portion of dividends paid by a Fund derived from interest on U.S. government obligations in your
gross income for purposes of personal and, in some cases, corporate income taxes in many state and local tax jurisdictions. The percentage
of dividends that constitutes dividends derived from interest on federal obligations will be determined annually. This percentage may
differ from the actual percentage of interest received by the Fund on federal obligations for the particular days on which you hold shares.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
If
a Fund qualifies to pass through to you the tax benefits from foreign taxes it pays on its investments, and elects to do so, then any
foreign taxes it pays on these investments may be passed through to you. You will then be required to include your pro-rata share of these
taxes in gross income, even though not actually received by you, and will be entitled either to deduct your share of these taxes in computing
your taxable income, or to claim a foreign tax credit for these taxes against your U.S. federal income tax.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim
any treaty benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations
provide
otherwise (which is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing
authorities or other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that
is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under
FATCA.
■
If
a Fund invests in an underlying fund taxed as a RIC, please see any relevant section below for more information regarding the Fund’s
investment in such underlying fund.
The
above discussion concerning the taxability of Fund dividends and distributions and of redemptions and exchanges of Fund shares is inapplicable
to investors holding shares through a tax-advantaged arrangement, such as Retirement and Benefit Plans or 529 college savings plans. Such
investors should refer to the applicable account documents/program description for that arrangement for more information regarding the
tax consequences of holding and redeeming Fund shares.
Funds
Investing in Municipal Securities
■
You
will not be required to include the “exempt-interest” portion of dividends paid by the Fund in either your gross income
for federal income tax purposes or your net investment income subject to the additional 3.8% Medicare tax. You will be required to report
the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. The percentage of dividends
that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt
interest received by the Fund for the particular days in which you hold shares.
■
A
Fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative
minimum tax liability for noncorporate shareholders, unless such municipal securities were issued in 2009 or 2010.
■
Exempt-interest
dividends from interest earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state’s
personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
■
A
Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. To the extent that dividends paid by a Fund
are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains.
■
A
Fund may distribute to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are
a taxable investor, Fund distributions from this income are taxable to you as ordinary income, and generally will neither qualify for
the dividends-received deduction in the case of corporate shareholders nor as qualified dividend income subject to reduced rates of taxation
in the case of noncorporate shareholders.
■
Exempt-interest
dividends from a Fund are taken into account when determining the taxable portion of your social security or railroad retirement benefits,
may be subject to state and local income taxes, may affect the deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you.
■
There
are risks that: (a) a security issued as tax-exempt may be reclassified by the IRS or a state tax authority as taxable and/or (b) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free.
Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased
tax liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of the Fund’s
shares, to decline.
Money
Market Funds
■
A
Fund does not anticipate realizing any long-term capital gains.
■
If
a Fund expects to maintain a stable net asset value of $1.00 per share, investors should not have any gain or loss on sale or exchange
of Fund shares (unless the investor incurs a liquidity fee on such sale or exchange). See “Liquidity Fees.”
A-23 The
Invesco Funds
■
There
is some degree of uncertainty with respect to the tax treatment of liquidity fees received by a Fund, and such tax treatment may be the
subject of future IRS guidance. If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the
Fund at such time.
■
Unless
you choose to adopt a simplified “NAV method” of accounting (described below), any capital gain or loss on the sale or exchange
of Fund shares (as noted above) generally will be treated either as short-term if you held your Fund shares for one year or less, or long-term
if you held your Fund shares longer. If you elect to adopt the NAV method of accounting, rather than computing gain or loss on every taxable
disposition of Fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your
Fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares
during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
Funds
Investing in Real Estate Securities
■
Because
of “noncash” expenses such as property depreciation, the cash flow of a REIT that owns properties will exceed its taxable
income. The REIT, and in turn a Fund, may distribute this excess cash to shareholders. Such a distribution is classified as a return of
capital. Return of capital distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the
amount of any return of capital. Any return of capital distributions in excess of your cost basis will be treated as capital gains.
■
Dividends
paid to shareholders from the Funds’ investments in U.S. REITs generally will not qualify for taxation at long-term capital gain
rates applicable to qualified dividend income.
■
The
Fund may derive “excess inclusion income” from certain equity interests in mortgage pooling vehicles either directly or
through an investment in a U.S. REIT. Please see the SAI for a discussion of the risks and special tax consequences to shareholders in
the event the Fund realizes excess inclusion income in excess of certain threshold amounts.
■
Under
the Tax Cuts and Jobs Act, “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and
portions of REIT dividends designated as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers.
The Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund
and a shareholder meet certain holding period requirements with respect to their shares.
■
The
Fund’s foreign shareholders should see the SAI for a discussion of the risks and special tax consequences to them from a sale of
a U.S. real property interest by a REIT in which the Fund invests.
Funds
Investing in Partnerships
■
Taxes,
penalties, and interest associated with an audit of a partnership
are generally required to be assessed and collected at the partnership level. Therefore, an adverse federal income tax audit of a partnership
that a Fund invests in (including MLPs taxed as partnerships) could result in the Fund being required to pay federal income tax. A Fund
may have little input in any audit asserted against a partnership and may be contractually or legally obligated to make payments in regard
to deficiencies asserted without the ability to put forward an independent defense. Accordingly, even if a partnership in which the Fund
invests were to remain classified as a partnership (instead of as a corporation), it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such partnership, could be required
to bear the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act “qualified publicly traded partnership income” is treated as eligible for a 20% deduction by noncorporate
taxpayers. The legislation does not contain a provision permitting a RIC, such as a Fund, to pass the special character of this income
through to its shareholders. It is uncertain whether a future technical corrections bill or
regulations
issued by the IRS will address this issue to enable a Fund to pass through the special character of “qualified publicly traded
partnership income” to its shareholders.
■
Some
amounts received by a Fund from the MLPs in which it invests likely will be treated as returns of capital to such Fund because of accelerated
deductions available to the MLPs. The receipt of returns of capital from the MLPs in which a Fund invests could cause some or all of the
Fund’s distributions to be classified as a return of capital. Return of capital distributions generally are not taxable to you.
Your cost basis in your Fund shares will be decreased by the amount of any return of capital. Any return of capital distributions in excess
of your cost basis will be treated as capital gains.
Funds
Investing in Commodities
■
The
Funds’ strategies of investing through their respective Subsidiary in derivatives and other financially linked instruments whose
performance is expected to correspond to the commodity markets may cause the Funds to recognize more ordinary income and short-term capital
gains taxable as ordinary income than would be the case if the Funds invested directly in commodities.
■
The
Funds must meet certain requirements under the Code for favorable tax treatment as a RIC, including asset diversification and income requirements.
The IRS has issued a revenue ruling which holds that income derived from commodity-linked swaps is not qualifying income for purposes
of the Income Requirement. In a subsequent revenue ruling, as well as in a number of follow-on private letter rulings (upon which only
the fund that received the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that invests in commodities, may be
considered qualifying income under the Code. However, the portion of such rulings relating to the treatment of a corporation as a regulated
investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of
the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security
under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The Funds
intend to treat the income each derives from commodity-linked notes as qualifying income based on an opinion from counsel confirming that
income from such investments should be qualifying income because such commodity-linked notes constitute securities under section 2(a)(36)
of the 1940 Act. Each Subsidiary will be classified for federal income tax purposes as a controlled foreign corporation (CFC) with respect
to the Fund. As such, the Fund will be required to include in its gross income each year amounts earned by the Subsidiary during that
year (“Subpart F” income), whether or not such earnings are distributed by the Subsidiary to the Fund (deemed inclusions).
Treasury Regulations also permit the Fund to treat such deemed inclusions of “Subpart F” income from the Subsidiary as qualifying
income to the Fund, even if the Subsidiary does not make a distribution of such income. Consequently, the Fund and the Subsidiary reserve
the right to rely on deemed inclusions being treated as qualifying income to the Fund consistent with Treasury Regulations. If, contrary
to the opinion of counsel or other guidance issued by the IRS, the IRS were to determine that income from direct investment in commodity-linked
notes is non-qualifying, a Fund might fail to satisfy the income requirement. In lieu of disqualification, the Funds are permitted to
pay a tax for certain failures to satisfy the asset diversification or income requirements, which, in general, are limited to those due
to reasonable cause and not willful neglect. The Funds intend to limit their investments in their respective Subsidiary to no more than
25% of the value of each Fund’s total assets in order to satisfy the asset diversification requirement.
Funds
Investing in Foreign Currencies
■
The
Funds may realize gains from the sale or other disposition of foreign currencies (including but not limited to gains from options, futures
or forward contracts) derived from investing in securities or foreign
A-24 The
Invesco Funds
currencies.
The U.S. Treasury Department is authorized to issue regulations on whether the realization of such foreign currency gains is qualified
income for the Funds. If such regulations are issued, each Fund may not qualify as a RIC and/or the Fund may change its investment policy.
As of the date of this prospectus, no regulations have been issued pursuant to this authorization. It is possible, however, that such
regulations may be issued in the future. Additionally, the IRS has not issued any guidance on how to apply the asset diversification test
to such foreign currency positions. Thus, the IRS’ determination as to how to treat such foreign currency positions for purposes
of satisfying the asset diversification test might differ from that of each Fund resulting in the Fund’s failure to qualify as
a RIC. In lieu of disqualification, each Fund is permitted to pay a tax for certain failures to satisfy the asset diversification or income
requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
■
The
Funds’ transactions in foreign currencies may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease the Funds' ordinary income distributions
to you, and may cause some or all of the Funds' previously distributed income to be classified as a return of capital. Return of capital
distributions generally are not taxable to you. Your cost basis in your Fund shares will be decreased by the amount of any return of capital.
Any return of capital distributions in excess of your cost basis will be treated as capital gains.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Taxes
(applicable to the Invesco SteelPath Funds only)
Although
the Code generally provides that a RIC does not pay an entity-level income tax, provided that it distributes all or substantially all
of its income, the Fund is not and does not anticipate becoming eligible to elect to be treated as a RIC because most or substantially
all of the Fund’s investments will consist of investments in MLP securities. The RIC tax rules therefore have no application to
the Fund or to its shareholders. As a result, the Fund is treated as a regular corporation, or “C” corporation, for U.S.
federal income tax purposes, and generally is subject to U.S. federal income tax on its taxable income at the corporate income tax rate.
In addition, as a regular corporation, the Fund will be subject to state and local taxes by reason of its tax status and its investments
in MLPs. Therefore, the Fund may have to pay federal, multiple state, and local taxes, which would reduce the Fund’s cash available
to make distributions to shareholders. An estimate for federal, state, and local tax liabilities will reduce the fund’s net asset
value. The extent to which the Fund is required to pay U.S. federal, state or local corporate income, franchise or other corporate taxes
could materially reduce the Fund’s cash available to make distributions to shareholders. In addition, investors in taxable accounts
should be aware of the following basic tax points as supplemented below where relevant:
Fund
Tax Basics
■
The
Fund intends to invest a significant portion of its assets in MLPs, which are generally treated as partnerships for U.S. federal income
tax purposes. To the extent that the Fund invests in equity securities of an MLP, the Fund will be a partner in such MLP. Accordingly,
the Fund will be required to take into account the Fund’s allocable share of the income, gains, losses, deductions, and credits
recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. MLP distributions to partners, such as the Fund,
are not taxable unless the cash amount (or in certain cases, the fair market value of marketable securities) distributed exceeds the Fund’s
basis in its MLP interest. The Fund expects that the cash distributions it will receive with respect to its investments in equity securities
of MLPs will exceed the net taxable income allocated to the Fund from such MLPs because of tax deductions such as depreciation, amortization
and depletion that will be allocated to the Fund from the MLPs. No assurance, however, can be given in this
regard.
If this expectation is not realized, the Fund will have a larger corporate income tax expense than expected, which will result in less
cash available for distribution to shareholders.
■
A
federal excise tax on stock repurchases is expected to apply to the Fund with respect to share redemptions occurring on or after January
1, 2023, in accordance with the provisions of the Inflation Reduction Act of 2022. The excise tax is 1% of the fair market value of Fund
share redemptions less the fair market value of Fund share issuances (in excess of $1 million of fair market value) annually on a taxable
year basis.
■
The
Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities
of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s
adjusted tax basis in such assets. Any such gain will be subject to U.S. federal income tax at the corporate income tax rate, regardless
of how long the Fund has held such assets since preferential capital gain rates do not apply to regular corporations such as the Fund.
The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the assets plus, in the case of MLP
equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result
of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP generally is equal
to the amount the Fund paid for the equity securities, (i) increased by the Fund’s allocable share of the MLP’s net taxable
income and certain MLP debt, if any, and (ii) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions
received by the Fund from the MLP. Although any distribution by an MLP to the Fund in excess of the Fund’s allocable share of such
MLP’s net taxable income may create a temporary economic benefit to the Fund, net of a deferred tax liability, such distribution
will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount
of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. To the extent that the Fund has a net capital
loss in any year, the net capital loss can be carried back three taxable years and forward five taxable years to reduce the Fund’s
capital gains in such years. In the event a capital loss carryover cannot be utilized in the carryover periods, the Fund’s federal
income tax liability may be higher than expected, which will result in less cash available to distribute to shareholders.
■
Distributions
by the Fund of cash or property in respect of the shares (other than certain distributions in redemption of shares) will be treated as
dividends for U.S. federal income tax purposes to the extent paid from the Fund’s current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). Generally, the Fund’s earnings and profits are computed based upon the Fund’s
taxable income (loss), with certain specified adjustments. Any such dividend likely will be eligible for the dividends-received deduction
if received by an otherwise qualifying corporate U.S. shareholder that meets certain holding period and other requirements for the dividends-received
deduction. Dividends paid by the Fund to certain non-corporate U.S. shareholders (including individuals), generally are eligible for U.S.
federal income taxation at the rates generally applicable to long-term capital gains for individuals provided that the U.S. shareholder
receiving the dividend satisfies applicable holding period and other requirements. Otherwise, dividends paid by the Fund to non-corporate
U.S. Shareholders (including individuals) will be taxable at ordinary income rates.
■
If
the amount of a Fund distribution exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated
first as a tax-deferred return of capital to the extent of, and in reduction of, a shareholder’s tax basis in the shares, and thereafter
as capital gain to the extent the shareholder held the shares as a capital asset. Any such capital gain will be long-term capital gain
if such shareholder has held the applicable shares for more than one year. The portion of the distribution received by a shareholder from
the Fund that is treated as a return of capital will decrease the shareholder’s tax basis in his or her Fund shares (but not below
zero), which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the shareholder
for tax purposes on the later sale of such Fund shares.
A-25 The
Invesco Funds
■
The
Fund anticipates that the cash distributions it will receive with respect to its investments in equity securities of MLPs and which it
will distribute to its shareholders will exceed the Fund’s current and accumulated earnings and profits. Accordingly, the Fund
expects that only a part of its distributions to shareholders with respect to the shares will be treated as dividends for U.S. federal
income tax purposes. No assurance, however, can be given in this regard.
■
Special
rules may apply to the calculation of the Fund’s earnings and profits. For example, the Fund’s earnings and profits will
be calculated using the straight-line depreciation method rather than the accelerated depreciation method. This difference in treatment
may, for example, result in the Fund’s earnings and profits being higher than the Fund’s taxable income or loss in a particular
year if the MLPs in which the Fund invests calculate their income using accelerated depreciation. Because of these special earnings profits
rules, the Fund may make distributions in a particular year out of earnings and profits (treated as dividends) in excess of the amount
of the Fund’s taxable income or loss for such year, which means that a larger percentage of the Fund ’s distributions could
be taxable to shareholders as ordinary income instead of tax-deferred return of capital or capital gain.
■
Shareholders
that receive distributions in shares rather than in cash will be treated for U.S. federal income tax purposes as having (i) received a
cash distribution equal to the fair market value of the shares received and (ii) reinvested such amount in shares.
■
A
redemption of shares will be treated as a sale or exchange of such shares, provided the redemption is not essentially equivalent to a
dividend, is a substantially disproportionate redemption, is a complete redemption of a shareholder’s entire interest in the Fund,
or is in partial liquidation of such Fund. Redemptions that do not qualify for sale or exchange treatment will be treated as distributions
as described above. Upon a redemption treated as a sale or exchange under these rules, a shareholder generally will recognize capital
gain or loss equal to the difference between the adjusted tax basis of his or her shares and the amount received when they are sold.
■
If
the Fund is required to sell portfolio securities to meet redemption requests, the Fund may recognize income and gains for U.S. federal,
state and local income and other tax purposes, which may result in the imposition of corporate income or other taxes on the Fund and may
increase the Fund’s current and accumulated earnings and profits, which will result in a greater portion of distributions to Fund
shareholders being treated as dividends. Any long-term or short-term capital gains realized on sale or redemption of your Fund shares
will be subject to federal income tax. For tax purposes an exchange of your shares for shares of another Fund is the same as a sale. An
exchange occurs when the purchase of shares of a Fund is made using the proceeds from a redemption of shares of another Fund and is effectuated
on the same day as the redemption. Your gain or loss is calculated by subtracting from the gross proceeds your cost basis. Gross proceeds
and, for shares acquired on or after January 1, 2012 and disposed of after that date, cost basis will be reported to you and the IRS.
Cost basis will be calculated using the Fund’s default method of first-in, first-out (FIFO), unless you instruct the Fund to use
a different calculation method. Shareholders should carefully review the cost basis information provided by a Fund and make any additional
basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns. If you
hold your Fund shares through a broker (or other nominee), please contact that broker (nominee) with respect to reporting of cost basis
and available elections for your account. For more information about the cost basis methods offered by Invesco, please refer to the Tax
Center located under the Account Access & Forms menu of our website at www.invesco.com/us.
■
The
conversion of shares of one class of a Fund into shares of another class of the same Fund is not taxable for federal income tax purposes
and no gain or loss will be reported on the transaction. This is true whether the conversion occurs automatically pursuant to the terms
of the class or is initiated by the shareholder.
■
At
the time you purchase your Fund shares, the Fund’s net asset value may reflect undistributed income. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just before it declares
an income dividend is sometimes known as “buying a dividend.” In addition, a Fund’s net asset value may, at any time,
reflect net unrealized appreciation, which may result in future taxable distributions to you.
■
By
law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications, you may be subject
to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your shares. A Fund also must withhold
if the IRS instructs it to do so. When withholding is required, the amount will be 24% of any distributions or proceeds paid.
■
A
3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends received from a Fund and net gains from redemptions
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)
exceeds a threshold amount. This Medicare tax, if applicable, is reported by you on, and paid with, your federal income tax return.
■
Fund
distributions and gains from sale or exchange of your Fund shares generally are subject to state and local income taxes.
■
Foreign
investors should be aware that U.S. withholding, special certification requirements to avoid U.S. backup withholding and claim any treaty
benefits, and estate taxes may apply to an investment in a Fund.
■
Under
the Foreign Account Tax Compliance Act (FATCA), a Fund will be required to withhold a 30% tax on income dividends made by the Fund to
certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be
deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned
foreign investment accounts. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by
the IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide otherwise (which
is not expected). A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or
other parties as necessary to comply with FATCA or similar laws. Withholding also may be required if a foreign entity that is a shareholder
of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
■
Taxes,
penalties, and interest associated with an audit of a partnership are generally required to be assessed and collected at the partnership
level. Therefore, an adverse federal income tax audit of an MLP taxed as a partnership that the Fund invests in could result in the Fund
being required to pay federal income tax. The Fund may have little input in any audit asserted against an MLP and may be contractually
or legally obligated to make payments in regard to deficiencies asserted without the ability to put forward an independent defense. Accordingly,
even if an MLP in which the Fund invests were to remain classified as a partnership, it could be required to pay additional taxes, interest
and penalties as a result of an audit adjustment, and the Fund, as a direct or indirect partner of such MLP, could be required to bear
the economic burden of those taxes, interest and penalties, which would reduce the value of Fund shares.
■
Under
the Tax Cuts and Jobs Act certain “qualified publicly traded partnership income” (e.g., certain income from certain of the
MLPs in which the Fund invests) is treated as eligible for a 20% deduction by noncorporate taxpayers. The Tax Cuts and Jobs Act does not
contain a provision permitting an entity, such as the Fund, to benefit from this deduction (since the Fund is taxed as a “C”
corporation) or pass the special character of this income through to its shareholders. Qualified publicly traded partnership income allocated
to a noncorporate investor investing directly in an MLP might, however, be eligible for the deduction.
A-26 The
Invesco Funds
The
above discussion concerning the taxability of Fund dividends and distributions
and of redemptions and exchanges of Fund shares is inapplicable to investors holding shares through a tax-advantaged arrangement, such
as Retirement and Benefit Plans or 529 college savings plans. Such investors should refer to the applicable account documents/program
description for that arrangement for more information regarding the tax consequences of holding and redeeming Fund shares.
This
discussion of “Taxes” is for general information only and not
tax advice. All investors should consult their own tax advisers as to the federal, state, local and foreign tax provisions applicable
to them.
Payments
to Financial Intermediaries – All Share Classes except Class R6 shares
The
financial adviser or intermediary through which you purchase your shares may receive all or a portion of the sales charges and distribution
fees discussed above. In addition to those payments, Invesco Distributors and other Invesco Affiliates, may make additional cash payments
to financial intermediaries in connection with the promotion and sale of shares of the Funds. These additional cash payments may include
cash payments and other payments for certain marketing and support services. Invesco Affiliates make these payments from their own resources,
from Invesco Distributors’ retention of initial sales charges and from payments to Invesco Distributors made by the Funds under
their 12b-1 plans. In the context of this prospectus, “financial intermediaries” include any broker, dealer, bank (including
bank trust departments), registered investment adviser, financial planner, retirement plan administrator, insurance company and any other
financial intermediary having a selling, administration or similar agreement with Invesco Affiliates.
The
benefits Invesco Affiliates receive when they make these payments include,
among other things, placing the Funds on the financial intermediary’s fund sales system, and access (in some cases on a preferential
basis over other competitors) to individual members of the financial intermediary’s sales force or to the financial intermediary’s
management. These payments are sometimes referred to as “shelf space” payments because the payments compensate the financial
intermediary for including the Funds in its fund sales system (on its “sales shelf”). Invesco Affiliates compensate financial
intermediaries differently depending typically on the level and/or type of considerations provided by the financial intermediary. The
payments Invesco Affiliates make may be calculated based on sales of shares of the Funds (Sales-Based Payments), in which case the total
amount of such payments shall not exceed 0.25% (0.10% for Class R5 shares) of the public offering price of all shares sold by the financial
intermediary during the particular period. Payments may also be calculated based on the average daily net assets of the applicable Funds
attributable to that particular financial intermediary (Asset-Based Payments), in which case the total amount of such cash payments shall
not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make new sales
of shares of the Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of the Funds in investor
accounts. Invesco Affiliates may pay a financial intermediary either or both Sales-Based Payments and Asset-Based Payments.
Invesco
Affiliates are motivated to make these payments as they promote
the sale of Fund shares and the retention of those investments by clients of the financial intermediaries. To the extent financial intermediaries
sell more shares of the Funds or retain shares of the Funds in their clients’ accounts, Invesco Affiliates benefit from the incremental
management and other fees paid to Invesco Affiliates by the Funds with respect to those assets.
The
Funds’ transfer agent may make payments to certain financial intermediaries
for certain administrative services, including record keeping and sub-accounting of shareholder accounts pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement. All fees payable by Invesco Affiliates under this category of services are charged
back to the Funds, subject to certain limitations approved by the Board.
You
can find further details in the Fund’s SAI about these payments and the
services provided by financial intermediaries. In certain cases these payments could be significant to the financial intermediaries. Your
financial adviser may charge you additional fees or commissions other than those disclosed in this prospectus. You can ask your financial
adviser about any payments it receives from Invesco Affiliates or the Funds, as well as about fees and/or commissions it charges.
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 the Funds’ transfer
agent at 800-959-4246 or contact your financial institution. The Funds’ transfer agent will begin sending you individual copies
for each account within thirty days after receiving your request.
Inactive
or Unclaimed Accounts
Please
note that if your account is deemed to be unclaimed or abandoned under applicable state law, the Fund may be required to transfer (or
“escheat”) the assets in that account to the appropriate state. Some states may sell escheated shares, in which case a shareholder
may only be able to recover the amount received when the shares were sold. For shareholders that invest through retirement accounts, the
escheatment will be treated as a taxable distribution and federal and any applicable state income tax may be withheld. The Fund, its Board,
and the Fund's transfer agent will not be liable to shareholders for good faith compliance with state unclaimed or abandoned property
laws. To avoid these outcomes and protect their property, shareholders that invest in the Fund through an account held directly with the
Fund's transfer agent are encouraged to routinely confirm that the mailing address on their account is current and valid and contact the
transfer agent at least once a year by one of the following methods:
•
Accessing your account online at invesco.com/us.
•
Accessing your account balance through the automated Invesco Investor Line at 800 246 5463.
•
Contacting us by phone or in writing for any matter related to your account.
A-27 The
Invesco Funds
Obtaining Additional Information
More
information may be obtained free of charge upon request. The SAI, a current version of which is on file with the SEC, contains more details
about the Fund and is incorporated by reference into this prospectus (is legally a part of this prospectus). Annual and semi-annual reports
to shareholders and Form N-CSR filed with the SEC contain additional information about the Fund’s investments. The Fund’s
annual report also discusses the market conditions and investment strategies that significantly affected the Fund’s performance
during its last fiscal year. The Fund also files its complete schedule of portfolio holdings with the SEC monthly on Form N-MFP.
If
you have questions about an Invesco Fund or your account, or you wish to obtain a free copy of the Fund’s current SAI, annual or
semi-annual reports or Form N-MFP, please contact us.
|
By
Mail: |
Invesco
Investment Services, Inc.
P.O.
Box 219078,
Kansas
City, MO 64121-9078 |
|
By
Telephone: |
(800)
959-4246 |
|
On
the Internet: |
You
can send us a request by e-mail or
download
prospectuses, SAIs, annual or
semi-annual
reports via our website:
www.invesco.com/us
|
Reports
and other information about the Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
Invesco
U.S. Government Money Portfolio
SEC 1940 Act file
number: 811-05686 |
|
invesco.com/us
|
O-GMKT-PRO-1
|
STATEMENT OF ADDITIONAL INFORMATION
Dated June 28, 2024
AIM Investment Securities Funds (Invesco Investment Securities Funds)
This Statement of Additional Information (the SAI) relates to each portfolio (each
a Fund, collectively, the Funds) of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the
Trust) listed below. Each Fund offers separate classes of shares as follows:
|
Fund
|
A
|
A2
|
AX
|
C
|
CX
|
R
|
Y
|
Invesco
Cash
Reserve
|
Class R5
|
Class R6
|
Investor
|
Prospectus Date
|
|
Invesco Corporate Bond Fund
|
ACCBX
|
N/A
|
N/A
|
ACCEX
|
N/A
|
ACCZX
|
ACCHX
|
N/A
|
ACCWX
|
ICBFX
|
N/A
|
June 28, 2024
|
|
Invesco Global Real Estate Fund
|
AGREX
|
N/A
|
N/A
|
CGREX
|
N/A
|
RGREX
|
ARGYX
|
N/A
|
IGREX
|
FGREX
|
N/A
|
June 28, 2024
|
|
Invesco Government Money Market Fund
|
ADAXX
|
N/A
|
ACZXX
|
ACNXX
|
ACXXX
|
AIRXX
|
AIYXX
|
AIMXX
|
N/A
|
INVXX
|
INAXX
|
June 28, 2024
|
|
Invesco High Yield Fund
|
AMHYX
|
N/A
|
N/A
|
AHYCX
|
N/A
|
N/A
|
AHHYX
|
N/A
|
AHIYX
|
HYIFX
|
HYINX
|
June 28, 2024
|
|
Invesco Income Fund
|
AGOVX
|
N/A
|
N/A
|
AGVCX
|
N/A
|
AGVRX
|
AGVYX
|
N/A
|
AGOIX
|
AGVSX
|
AGIVX
|
June 28, 2024
|
|
Invesco Intermediate Bond Factor Fund
|
OFIAX
|
N/A
|
N/A
|
OFICX
|
N/A
|
OFINX
|
OFIYX
|
N/A
|
IOTEX
|
OFIIX
|
N/A
|
June 28, 2024
|
|
Invesco Real Estate Fund
|
IARAX
|
N/A
|
N/A
|
IARCX
|
N/A
|
IARRX
|
IARYX
|
N/A
|
IARIX
|
IARFX
|
REINX
|
June 28, 2024
|
|
Invesco Short Duration Inflation Protected
Fund
|
LMTAX
|
SHTIX
|
N/A
|
N/A
|
N/A
|
N/A
|
LMTYX
|
N/A
|
ALMIX
|
SDPSX
|
N/A
|
June 28, 2024
|
|
Invesco Short Term Bond Fund
|
STBAX
|
N/A
|
N/A
|
STBCX
|
N/A
|
STBRX
|
STBYX
|
N/A
|
ISTBX
|
ISTFX
|
N/A
|
June 28, 2024
|
|
Invesco U.S. Government Money Portfolio
|
N/A
|
N/A
|
N/A
|
GMCXX
|
N/A
|
GMLXX
|
OMBXX
|
GMQXX
|
N/A
|
GMRXX
|
N/A
|
June 28, 2024
|
This SAI is not a Prospectus, and it should be read in conjunction with the Prospectuses
for the Funds listed above. Invesco Intermediate Bond Factor Fund and Invesco U.S. Government Money Portfolio were organized on May 24, 2019 for the purpose of acquiring the assets and liabilities
of corresponding predecessor funds (as defined below). Portions of each Fund's financial statements
are incorporated into this SAI by reference to each Fund’s most recent shareholder report for its fiscal year ended February 29, 2024.
You may obtain, without charge, a copy of any Prospectus and/or shareholder report
for any Fund listed above from an authorized dealer or by writing to:
Invesco Investment Services, Inc.
P.O. Box 219078
Kansas City, MO 64121-9078
P.O. Box 219078
Kansas City, MO 64121-9078
or by calling (800) 959-4246
or on the Internet: http://www.invesco.com/us
Any reference to the term “Fund” or “Funds” throughout this SAI refers to each Fund named above unless otherwise indicated.
AIS-SOAI-1
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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ii
GENERAL INFORMATION ABOUT THE TRUST
Fund History
AIM Investment Securities Funds (Invesco Investment Securities Funds) (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. The Trust was originally organized
as a Maryland corporation on November 4, 1988 and re-organized as a Delaware statutory trust on May 5, 1993. Under the Trust’s Agreement and Declaration of Trust, as amended, (the Trust Agreement), the Board of Trustees of the Trust (the Board) is authorized to create new series of shares without the necessity
of a vote of shareholders of the Trust.
Prior to April 30, 2010, the Trust was known as AIM Investment Securities Funds.
The following table shows each Fund’s current name and Fund history:
Shares of Beneficial Interest
Shares of beneficial interest of the Trust are redeemable at their net asset value
at the option of the shareholder or at the option of the Trust, in accordance with any applicable provisions
of the Trust Agreement and applicable law, subject in certain circumstances to a contingent deferred sales
charge, if applicable.
The Trust allocates cash and property it receives from the issue or sale of shares,
together with all assets in which such consideration is invested or reinvested, all income, earnings, profits
and proceeds thereof, to the appropriate Fund, subject only to the rights of creditors of that Fund. These
assets constitute the assets belonging to each Fund, are segregated on the Trust’s books, and are charged with the liabilities and expenses of such Fund and its respective classes. The Trust allocates any general
liabilities and expenses of the Trust not readily identifiable as belonging to a particular Fund primarily on
the basis of relative net assets or other relevant factors, subject to oversight by the Board.
1
Each share of each Fund represents an equal pro rata interest in that Fund with each
other share and is entitled to dividends and other distributions with respect to the Fund, which may
be from income, capital gains, capital or distributions in kind, as declared by the Board.
Each class of shares of a Fund represents a proportionate undivided interest in the
net assets belonging to that Fund. Differing sales charges and expenses will result in differing net asset
values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are
entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for
distribution after satisfaction of, or reasonable provision for, the outstanding liabilities of the Fund allocable
to such class.
The Trust Agreement provides that each shareholder, by virtue of having become a shareholder
of the Trust, is bound by terms of the Trust Agreement and the Trust’s Bylaws. Ownership of shares does not make shareholders third party beneficiaries of any contract entered into by the Trust.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings
of shareholders of a Fund or class will be held for any purpose determined by the Board, including from
time to time to consider matters requiring a vote of such shareholders in accordance with the requirements
of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that shareholder meetings
will be held annually.
The Trust Agreement provides that the Board may authorize (i) a merger, consolidation
or sale of assets (including, but not limited to, mergers, consolidations or sales of assets between
two Funds, or between a Fund and a series of any other registered investment company), and (ii) the combination
of two or more classes of shares of a Fund into a single class, each without shareholder approval
but subject to applicable requirements under the 1940 Act and state law.
Each share of a Fund generally has the same voting, dividend, liquidation and other
rights; however, each class of shares of a Fund is subject to different sales loads, conversion features,
exchange privileges and class-specific expenses, as applicable.
Except as specifically noted above, shareholders of each Fund are entitled to one
vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset
value of the shares of the Fund. However, on matters affecting an individual Fund or class of shares, a separate
vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to
vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund
or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval
of the advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco).
When issued, shares of each Fund are fully paid and nonassessable, have no preemptive
or subscription rights, and are freely transferable. Shares do not have cumulative voting rights in
connection with the election of Trustees or on any other matter.
Under Delaware law, shareholders of a Delaware statutory trust shall be entitled to
the same limitation of personal liability extended to shareholders of private for-profit corporations organized
under Delaware law. There is a remote possibility, however, that shareholders could, under certain circumstances,
be held liable for the obligations of the Trust to the extent the courts of another state, which does
not recognize such limited liability, were to apply the laws of such state to a controversy involving such obligations.
The Trust Agreement disclaims shareholder personal liability for the debts, liabilities, obligations and
expenses of the Trust and requires that every undertaking of the Trust or the Board relating to the Trust or
any Fund include a recitation limiting such obligation to the Trust and its assets or to one or more of the Funds
and the assets belonging thereto. The Trust Agreement provides for indemnification out of the property of a
Fund (or class, as applicable) for all losses and expenses of any shareholder of such Fund held personally
liable solely on account of being or having been a shareholder.
The trustees and officers of the Trust will not be liable for any act, omission or
obligation of the Trust or any trustee or officer; however, a trustee or officer is not protected against any
liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct
of his or her office with the
2
Trust or applicable Fund (Disabling Conduct). The Trust’s Bylaws generally provide for indemnification by the Trust of the trustees, officers and employees or agents of the Trust, provided that
such persons have not engaged in Disabling Conduct. Indemnification does not extend to judgments or amounts
paid in settlement in any actions by or in the right of the Trust. The Trust Agreement also authorizes the
purchase of liability insurance on behalf of trustees and officers with Fund assets. The Trust’s Bylaws provide for the advancement of payments of expenses to current and former trustees, officers and employees
or agents of the Trust, or anyone serving at their request, in connection with the preparation
and presentation of a defense to any claim, action, suit or proceeding, for which such person would be entitled
to indemnification; provided that any advancement of expenses would be reimbursed unless it is ultimately determined
that such person is entitled to indemnification for such expenses.
The Trust Agreement provides that any Trustee who serves as chair of the Board, a
member or chair of a committee of the Board, lead independent Trustee, or an expert on any topic or in
any area (including an audit committee financial expert), or in any other special appointment will not be subject
to any greater standard of care or liability because of such position.
The Trust Agreement provides a detailed process for the bringing of derivative actions
by shareholders. A shareholder may only bring a derivative action on behalf of the Trust if certain conditions
are met. Among other things, such conditions: (i) require shareholder(s) to make a pre-suit demand
on the Trustees (unless such effort is not likely to succeed because a majority of the Board or the committee
established to consider the merits of such action are not independent Trustees under Delaware law); (ii) require
10% of the beneficial owners to join in the pre-suit demand, or if a pre-suit demand is not required, require
10% of beneficial owners to join in the demand for the Board to commence such action; and (iii) afford
the Trustees a reasonable amount of time to consider the request and investigate the basis of the
claims (including designating a committee to consider the demand and hiring counsel or other advisers).
These conditions generally are intended to provide the Trustees with the ability to pursue a claim
if they believe doing so would be in the best interests of the Trust and its shareholders and to preclude the pursuit
of claims that the Trustees determine to be without merit or otherwise not in the Trust’s best interest to pursue. Insofar as the federal securities laws supersede state law, these provisions do not apply to shareholder
derivative claims that arise under the federal securities laws.
The Trust Agreement also generally requires that actions by shareholders in connection
with or against the Trust or a Fund be brought only in certain Delaware courts, provided that actions
arising under the U.S. federal securities laws are required to be brought in the United States District Court
for the Southern District of New York and that the right to jury trial be waived to the fullest extent permitted
by law. These provisions may result in increased shareholder costs in pursuing a shareholder derivative claim
and/or may limit a shareholder's ability to bring a claim in a different forum.
Share Certificates
Shareholders of the Funds do not have the right to demand or require the Trust to
issue share certificates and share certificates are not issued. Any certificate previously issued with respect
to any shares is deemed to be cancelled without any requirement for surrender to the Trust.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
Classification
The Trust is an open-end management investment company. Each of the Funds is classified
as "diversified" for purposes of the 1940 Act.
Investment Strategies and Risks
Set forth below are detailed descriptions of the various types of securities and investment
techniques that Invesco and/or the Sub-Advisers (as defined herein) may use in managing the Funds,
as well as the risks associated with those types of securities and investment techniques. The descriptions
of the types of securities and investment techniques below supplement the discussion of principal
investment strategies and
3
risks contained in each Fund's Prospectus. Where a particular type of security or
investment technique is not discussed in a Fund’s Prospectus, that security or investment technique is not a principal investment strategy.
A Fund may invest in all of the following types of investments (unless otherwise indicated).
A Fund might not invest in all of these types of securities or use all of these techniques at any
one time. Invesco and/or the Sub-Advisers may invest in other types of securities and may use other investment
techniques in managing the Funds, including those described below for Funds not specifically mentioned as investing
in the security or using the investment technique as well as securities and techniques not described. A Fund’s transactions in a particular type of security or use of a particular technique are subject to limitations imposed by a Fund’s investment objective, policies and restrictions described in that Fund’s Prospectus and/or this SAI, as well as the federal securities laws. Incidental to their investment activities, Funds that have a principal investment strategy of primarily investing in fixed income securities,
may acquire equity securities (including common stocks, preferred stocks, convertible securities, warrants and rights) or other investments
that the Fund ordinarily would not purchase, in connection with a bankruptcy, restructuring, workout or other extraordinary event concerning
a particular portfolio investment. To the extent a Fund acquires equity securities or investments as described above, it may also purchase
additional equity securities or investments of those issuers.
Unless a Fund’s prospectus or this SAI states that a percentage limitation or fundamental or non-fundamental restriction applies on an ongoing basis, it applies only at the time a Fund makes
an investment. That means a Fund is not required to sell securities to meet the percentage limits
or investment restrictions if the value of the investment increases in proportion to the size of a Fund. Percentage
limits on borrowing and illiquid investments apply on an ongoing basis.
The Funds' investment objectives, policies, strategies and practices described below
are non-fundamental and may be changed without approval of the holders of the Funds’ voting securities, unless otherwise indicated.
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio are
managed in accordance with Rule 2a-7 and will only invest in debt investments that meet the portfolio
requirements of Rule 2a-7 discussed in this SAI, including those related to maturity, quality, diversification,
and liquidity.
Equity Investments
Common Stock. Common stock is issued by a company principally to raise cash for business purposes
and represents an equity or ownership interest in the issuing company. Common stockholders
are typically entitled to vote on important matters of the issuing company, including the selection
of directors, and may receive dividends on their holdings. A Fund participates in the success or failure
of any company in which it holds common stock. In the event a company is liquidated or declares bankruptcy, the
claims of bondholders, other debt holders, owners of preferred stock and general creditors take precedence
over the claims of those who own common stock.
The prices of common stocks change in response to many factors including the historical
and prospective earnings of the issuing company, the value of its assets, general economic conditions,
interest rates, investor perceptions and market liquidity.
Over-the-Counter Securities. Securities of small- and mid-capitalization issuers may be traded on securities exchanges or in the over-the-counter market. The over-the-counter markets,
both in the U.S. and abroad, may have less liquidity than securities exchanges. That lack of liquidity
can affect the price the Fund is able to obtain when it wants to sell a security, because if there are fewer buyers
and less demand for a particular security, the Fund might not be able to sell it at an acceptable price
or might have to reduce the price in writing in order to dispose of the security. There are a number of over-the-counter
markets in the U.S., as well as those abroad, as long as a dealer is willing to make a market in a particular
security.
Preferred Stock. Preferred stock, unlike common stock, often offers a specified dividend rate payable
from a company’s earnings. Preferred stock also generally has a preference over common stock on the
4
distribution of a company’s assets in the event the company is liquidated or declares bankruptcy; however, the rights of preferred stockholders on the distribution of a company’s assets in the event of a liquidation or bankruptcy are generally subordinate to the rights of the company’s debt holders and general creditors. If interest rates rise, the fixed dividend on preferred stocks may be less attractive,
causing the price of preferred stocks to decline.
Some fixed rate preferred stock may have mandatory sinking fund provisions which provide
for the stock to be retired or redeemed on a predetermined schedule, as well as call/redemption
provisions prior to maturity, which can limit the benefit of any decline in interest rates that might
positively affect the price of preferred stocks. Preferred stock dividends may be “cumulative,” requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer’s common stock. Preferred stock may be “participating,” which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means
that the interest to be paid is set by auction and will often be reset at stated intervals.
Small- and Mid-Capitalization Companies. Small-capitalization (small-cap) companies may be either established or newer companies, including “unseasoned” companies that have typically been in operation for less than three years. Mid-capitalization (mid-cap) companies are generally companies
that have completed their initial start-up cycle, and in many cases have established markets and developed
seasoned market teams. While smaller companies might offer greater opportunities for gain than larger
companies, they also involve greater risk of loss. They may be more sensitive to changes in a company’s earnings expectations and may experience more abrupt and erratic price movements. Small- and mid-cap companies’ securities often trade in lower volumes and in many instances, are traded over-the-counter or
on a regional securities exchange, where the frequency and volume of trading is substantially less than is
typical for securities of larger companies traded on national securities exchanges. Therefore, the securities
of smaller companies may be subject to wider price fluctuations and it might be harder for the Fund to
dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-cap companies may not
have established markets for their products or services and may have fewer customers and product lines.
They may have more limited access to financial resources and may not have the financial strength to sustain
them through business downturns or adverse market conditions. Since small- and mid-cap companies
typically reinvest a high proportion of their earnings in their business, they may not pay dividends for
some time, particularly if they are newer companies. Small- and mid-cap companies may have unseasoned management
or less depth in management skill than larger, more established companies. They may be more reliant
on the efforts of particular members of their management team and management changes may pose a greater
risk to the success of the business. Securities of small, unseasoned companies may be particularly
volatile, especially in the short-term, and may have very limited liquidity in a declining market. It may
take a substantial period of time to realize a gain on an investment in a small- or mid-cap company, if any gain
is realized at all.
When the Fund invests in smaller company securities that might trade infrequently,
investors might seek to trade Fund shares based on their knowledge or understanding of the value of those
securities (this is sometimes referred to as “price arbitrage”). If such price arbitrage were successful, it might interfere with the efficient management of the Fund’s portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that
activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.
Equity-Linked Securities. Equity-linked securities are instruments whose value is based upon the value of one or more underlying equity securities, a reference rate or an index. Equity-linked
securities come in many forms and may include features, among others, such as the following: (i) may
be issued by the issuer of the underlying equity security or by a company other than the one to which the instrument
is linked (usually an investment bank), (ii) may convert into equity securities, such as common stock, within
a stated period from the issue date or may be redeemed for cash or some combination of cash and the linked
security at a value based upon the value of the underlying equity security within a stated period from
the issue date, (iii) may have various conversion features prior to maturity at the option of the holder or
the issuer or both, (iv) may limit the appreciation value with caps or collars of the value of the underlying equity
security and (v) may have fixed, variable or no interest payments during the life of the security which reflect
the actual or a structured
5
return relative to the underlying dividends of the linked equity security. Investments
in equity-linked securities may subject a Fund to additional risks not ordinarily associated with investments
in other equity securities. Because equity-linked securities are sometimes issued by a third party other than
the issuer of the linked security, a Fund is subject to risks if the underlying equity security, reference
rate or index underperforms or if the issuer defaults on the payment of the dividend or the common stock at maturity.
In addition, the trading market for particular equity-linked securities may be less liquid, making it difficult
for a Fund to dispose of a particular security when necessary and reduced liquidity in the secondary market for
any such securities may make it more difficult to obtain market quotations for valuing the Fund’s portfolio.
Convertible Securities. Convertible securities are generally bonds, debentures, notes, preferred stocks or other securities or investments that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value)
at a stated exchange ratio or predetermined price (the conversion price). A convertible security is designed
to provide current income and also the potential for capital appreciation through the conversion feature, which
enables the holder to benefit from increases in the market price of the underlying common stock. A convertible
security may be called for redemption or conversion by the issuer after a particular date and under
certain circumstances (including a specified price) established upon issue. If a convertible security held
by a Fund is called for redemption or conversion, the Fund could be required to tender it for redemption,
convert it into the underlying common stock, or sell it to a third party, which may have an adverse effect on the Fund’s ability to achieve its investment objectives. Convertible securities have general characteristics similar
to both debt and equity securities.
A convertible security generally entitles the holder to receive interest paid or accrued
until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to non-convertible debt obligations and are designed to provide
for a stable stream of income with generally higher yields than common stocks. However, there can be no assurance
of current income because the issuers of the convertible securities may default on their obligations.
Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities entail more risk than its debt obligations. Moreover, convertible securities are often rated below investment grade
or not rated because they fall below debt obligations and just above common stock in order of preference or priority on an issuer’s balance sheet. To the extent that a Fund invests in convertible securities with credit
ratings below investment grade, such securities may have a higher likelihood of default, although this may
be somewhat offset by the convertibility feature.
Convertible securities generally offer lower interest or dividend yields than non-convertible
debt securities of similar credit quality because of the potential for capital appreciation. The common
stock underlying convertible securities may be issued by a different entity than the issuer of the
convertible securities.
The value of convertible securities is influenced by both the yield of non-convertible
securities of comparable issuers and by the value of the underlying common stock. The value of a
convertible security viewed without regard to its conversion feature (i.e., strictly on the basis of its
yield) is sometimes referred to as its “investment value.” The investment value of the convertible security typically will fluctuate based on the credit quality of the issuer and will fluctuate inversely with changes in prevailing
interest rates. However, at the same time, the convertible security will be influenced by its “conversion value,” which is the market value of the underlying common stock that would be obtained if the convertible security were
converted. Conversion value fluctuates directly with the price of the underlying common stock, and will
therefore be subject to risks relating to the activities of the issuer and general market and economic conditions.
Depending upon the relationship of the conversion price to the market value of the underlying security,
a convertible security may trade more like an equity security than a debt instrument.
Invesco Global Real Estate Fund, Invesco High Yield Fund and Invesco Real Estate Fund
will invest in convertible securities based primarily on the characteristics of the equity security
into which it converts, and without regard to the credit rating of the convertible security (even if the credit
rating is below investment
6
grade). To the extent that a Fund invests in convertible securities with credit ratings
below investment grade, such securities may have a higher likelihood of default, although this may be somewhat
offset by the convertibility feature. See also "Debt Investments - Non-Investment Grade Debt Obligations
(Junk Bonds)" below.
If, because of a low price of the common stock, the conversion value is substantially
below the investment value of the convertible security, the price of the convertible security is governed
principally by its investment value. Generally, if the conversion value of a convertible security increases to a
point that approximates or exceeds its investment value, the value of the security will be principally influenced
by its conversion value. A convertible security will sell at a premium over its conversion value to the extent
investors place value on the right to acquire the underlying common stock while holding an income-producing security.
While a Fund uses the same criteria to rate a convertible debt security that it uses
to rate a more conventional debt security, a convertible preferred stock is treated like a preferred stock for the Fund’s financial reporting, credit rating and investment limitation purposes.
Contingent Convertible Securities (CoCos). CoCos (also referred to as contingent capital securities) are a form of hybrid fixed income security typically issued by non-U.S. banks that may either
convert into common stock of the issuer or undergo a principal write-down by a predetermined percentage
upon the occurrence of a “trigger” event, such as if (a) the issuer’s capital ratio falls below a specified level or (b) certain regulatory events, such as a change in regulatory capital requirements, affect the issuer’s continued viability. Unlike traditional convertible securities, the conversion is not voluntary and the equity
conversion or principal write-down features are tailored to the issuing banking institution and its regulatory requirements.
In certain circumstances, CoCos may be automatically written down to zero, thereby cancelling
the securities, and investors (including a Fund) could lose the entire value of their investment even
as the issuer remains in business. If such an event occurs, an investor may not have any rights to repayment
of the principal amount of the securities that has not become due. Additionally, an investor may not be able
to collect interest payments or dividends on such securities.
CoCos are subject to credit, interest rate and market risks associated with fixed
income and equity securities generally, along with risks typically applicable to convertible securities.
CoCos are also subject to loss absorption risk because coupon payments can potentially be cancelled or deferred at the issuer’s discretion or at the request of the relevant regulatory authority in order to help
the bank absorb losses. Additionally, certain call provisions permit an issuer to repurchase CoCos if the
regulatory environment or tax treatment of the security (e.g., tax deductibility of interest payments) changes.
This may result in a potential loss to the Fund if the price at which the issuer calls or repurchases the CoCos is
lower than the initial purchase price by the Fund.
CoCos are subordinate in rank to traditional convertible securities and other debt
obligations of an issuer in the issuer’s capital structure, and therefore, CoCos entail more risk than an issuer’s other debt obligations.
CoCos are generally speculative and their market value may fluctuate based on a number
of unpredictable factors, including, but not limited to, the creditworthiness of the
issuer and/or fluctuations in the issuer’s capital ratios, supply and demand for CoCos, general market conditions and available liquidity, and economic, financial and political events affecting the particular issuer or markets
in general.
Enhanced Convertible Securities. “Enhanced” convertible securities are equity-linked hybrid securities that automatically convert to equity securities on a specified date. Enhanced convertibles
have been designed with a variety of payoff structures, and are known by a variety of different names.
Three features common to enhanced convertible securities are (i) conversion to equity securities at the maturity
of the convertible (as opposed to conversion at the option of the security holder in the case of ordinary
convertibles); (ii) capped or limited appreciation potential relative to the underlying common stock; and (iii)
dividend yields that are typically higher than that on the underlying common stock. Thus, enhanced convertible
securities offer holders the opportunity to obtain higher current income than would be available from a traditional
equity security issued by the same company in return for reduced participation in the appreciation
potential of the underlying common stock. Other forms of enhanced convertible securities may involve arrangements
with no interest or
7
dividend payments made until maturity of the security or an enhanced principal amount
received at maturity based on the yield and value of the underlying equity security during the security’s term or at maturity.
Synthetic Convertible Securities. A synthetic convertible security is a derivative position composed of two or more distinct securities whose investment characteristics, taken together, resemble
those of traditional convertible securities, i.e., fixed income and the right to acquire the underlying
equity security. For example, a Fund may purchase a non-convertible debt security and a warrant or option, which enables
a Fund to have a convertible-like position with respect to a security or index.
Synthetic convertibles are typically offered by financial institutions in private
placement transactions and are typically sold back to the offering institution. Upon conversion, the holder generally
receives from the offering institution an amount in cash equal to the difference between the conversion
price and the then-current value of the underlying security. Synthetic convertible securities differ from true
convertible securities in several respects. The value of a synthetic convertible is the sum of the values
of its fixed-income component and its convertibility component. Thus, the values of a synthetic convertible
and a true convertible security will respond differently to market fluctuations. Purchasing a synthetic convertible
security may provide greater flexibility than purchasing a traditional convertible security, including
the ability to combine components representing distinct issuers, or to combine a fixed income security with
a call option on a stock index, when the Adviser determines that such a combination would better further a Fund’s investment goals. In addition, the component parts of a synthetic convertible security may be purchased
simultaneously or separately.
The holder of a synthetic convertible faces the risk that the price of the stock or
the level of the market index underlying the convertibility component will decline. In addition, in purchasing
a synthetic convertible security, a Fund may have counterparty risk with respect to the financial institution
or investment bank that offers the instrument.
Alternative Entity Securities. Alternative entity securities are the securities of entities that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate
entities that are similar to common or preferred stock of corporations.
Initial Public Offerings. Initial public offerings (IPOs) of securities issued by unseasoned companies with
little or no operating history are risky and their prices are highly volatile, but
they can result in very large gains in their initial trading. Attractive IPOs are often oversubscribed and may not be
available to a Fund, or only in very limited quantities. Thus, when a Fund’s size is smaller, any gains from IPOs will have an exaggerated impact on the Fund’s reported performance than when the Fund is larger. A Fund may engage in short-term trading in connection with its IPO investments, which could produce higher trading
costs and adverse tax consequences. There can be no assurance that a Fund will have favorable IPO investment
opportunities.
Special Purpose Acquisition Companies. Special purpose acquisition companies (“SPACs”) are investment entities, acquired through stocks, warrants and other securities, that
pool funds to seek potential acquisition or merger opportunities. A SPAC is a publicly traded company that raises
funds through an initial public offering (“IPO”) for the purpose of acquiring or merging with another company to be identified subsequent to the SPAC’s IPO. The securities of a SPAC are often issued in “units” that include one share of common stock and one right or warrant (or partial right or warrant) conveying the
right to purchase additional common shares or partial shares of the SPAC. In some cases, the rights and warrants
may be separated from the common stock at the election of the holder, after which they may become freely
tradeable. If a Fund purchases shares of a SPAC in an IPO it will generally bear a sales commission, which
may be significant.
Unless and until a business combination transaction is completed, a SPAC generally
invests its assets (which are constituted solely by the proceeds of the IPO), less a portion retained
to cover expenses, in U.S. government securities, money market funds and similar investments whose returns or
yields may be significantly lower than those of a Fund’s other investments. If an acquisition or merger that meets the requirements for the SPAC is not completed within a pre-established period of time,
the invested funds are returned to the SPAC’s shareholders, less certain permitted expenses, and any rights or warrants issued by the SPAC will expire worthless. Under any circumstances in which a Fund receives a
refund of all or a portion
8
of its original investment in a SPAC, the returns on that investment may be negligible,
and a Fund may be subject to opportunity costs to the extent that alternative investments would have
produced higher returns. Further, a Fund may be delayed in receiving any redemption or liquidation proceeds
from a SPAC to which it is entitled.
Because SPACs are in essence “blank check” companies without operating histories or ongoing business operations (other than identifying and pursuing acquisition or merger opportunities),
the potential for the long term capital appreciation of their securities is dependent on the ability of the SPAC’s sponsor to identify and complete a profitable business combination. There is no guarantee that the SPACs in
which a Fund invests will complete a business combination or that any transaction completed by the SPACs
in which a Fund invests will be profitable. Even if a SPAC in which a Fund has invested identifies a desirable
acquisition or merger target and reaches agreement with that company as to the terms of the business combination,
there can be no guarantee that the transaction will ultimately be consummated because, among other
conditions that must be satisfied, a requisite number of shareholders of the SPAC or of the target company
do not vote in favor of the transaction. The values of investments in SPACs may be highly volatile and may
depreciate significantly over time. Some SPACs may pursue acquisitions or mergers only within certain industries
or regions, which may ultimately lead to an increase in the volatility of their prices following completion
of a business combination. In addition, some of these securities may be considered illiquid and/or
subject to restrictions on resale, leaving a Fund unable to sell its interest in a SPAC or able to sell its interest
only at a price below what that Fund believes is the SPAC interest’s intrinsic value. Additionally, an investment in a SPAC may be diluted by additional later offerings of interests in the SPAC or by other investors exercising
their warrants to purchase shares of the SPAC.
Due to the risk of the loss of sponsors’ and other initial investors’ capital if an acquisition or merger is not consummated, sponsors of SPACs may be incentivized to consummate business combinations
at less attractive valuations at the expense of SPAC shareholders. In addition, as the number
of SPACs grows, there is greater competition among SPACs and traditional purchasers of companies, which
further increases the likelihood that SPAC sponsors may be incentivized to consummate acquisitions or mergers
at less attractive valuations, as well as the risk that SPACs cannot successfully complete business combinations. In addition, recent regulations promulgated by the SEC impose additional disclosure obligations
and other requirements on SPACs and may impact the ability of a SPAC to conduct its operations.
Equity-Linked Notes (ELNs). ELNs are hybrid derivative-type instruments, in a single note form, that are specially designed to combine the characteristics of one or more reference securities
(such as a single stock, exchange-traded fund, exchange-traded note, or an index or basket of securities (underlying
securities)) and a related equity derivative, such as a put or call option. Generally, when purchasing
an ELN, a Fund pays the counterparty the current value of the underlying securities plus a commission. Upon
the maturity of the note, the Fund generally receives the par value of the note plus a return based on the appreciation
of the underlying securities. A Fund may or may not hold an ELN until its maturity. If the
underlying securities have depreciated in value or if their price fluctuates outside of a preset range, depending
on the type of ELN, the Fund may receive only the principal amount of the note, or may lose the entire principal
invested in the ELN. ELNs are available with an assortment of features, including periodic coupon payments;
limitations on participation in the appreciation of the underlying securities; and different protection levels on the Fund’s principal investment. A Fund will only invest in ELNs for which the underlying security
is a permissible investment for the Fund in accordance with its investment policies and restrictions.
ELNs are generally in two types: (1) those that provide for protection of a Fund’s principal in exchange for limited participation in the appreciation of the underlying securities, and (2) those that do not provide for such
protection and subject a Fund to the risk of loss of its principal investment.
Investments in ELNs possess the risks associated with the underlying securities, such
as management risk, market risk and, as applicable, foreign securities and currency risks. In addition,
as a note, ELNs are also subject to certain debt securities risks, such as interest rate and credit risk. An
investment in an ELN also bears the risk that the ELN issuer will default or become bankrupt. In such an event,
the Fund may have difficulty being repaid, or fail to be repaid, the principal amount of, or income
from, its investment. ELNs may be structured to be subordinated or unsubordinated to other classes of debt holders'
right of payment. A
9
downgrade or impairment to the credit rating of the issuer may also negatively impact
the price of the ELN. The Fund may also experience liquidity issues when investing in ELNs, as ELN transactions
generally take place in the over-the-counter institutional investment market as well as in privately
negotiated transactions with ELN issuers. The secondary market for ELNs may be limited, and the lack of liquidity
may make ELNs difficult to sell at a desirable time and price and value. ELNs may be subject to resale restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended
(the 1933 Act). The price of an ELN may not correlate with the price of the underlying securities or a
fixed-income investment. As the holder of an ELN, the Fund generally has no rights to the underlying securities,
including no voting rights or rights to receive dividends. The Adviser’s ability to accurately forecast movements in the underlying securities will determine the success of the Fund’s ELNs investments. Should the prices of the underlying securities move in an unexpected manner, the Fund may not achieve the anticipated
benefits of its ELN investments, and it may realize losses, which could be significant and could include the Fund’s entire principal investment.
Foreign Investments
Foreign Securities. Foreign securities are equity or debt securities issued by issuers outside the United
States, and include securities in the form of American Depositary Receipts (ADRs),
European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) or other securities representing
underlying securities of foreign issuers (foreign securities). ADRs are receipts, issued by U.S. banks, for
the shares of foreign corporations, held by the bank issuing the receipt. ADRs are typically issued in registered
form, denominated in U.S. dollars and designed for use in the U.S. securities markets. GDRs are bank
certificates issued in more than one country for shares in a foreign company. The shares are held by a foreign
branch of an international bank. GDRs trade as domestic shares but are offered for sale globally through the
various bank branches. GDRs are typically used by private markets to raise capital and are denominated in
either U.S. dollars or foreign currencies. EDRs are similar to ADRs and GDRs, except they are typically issued
by European banks or trust companies, denominated in foreign currencies and designed for use outside
the U.S. securities markets. ADRs, EDRs and GDRs entitle the holder to all dividends and capital gains
on the underlying foreign securities, less any fees paid to the bank. Purchasing ADRs, EDRs or GDRs gives a
Fund the ability to purchase the functional equivalent of foreign securities without going to the foreign
securities markets to do so. ADRs, EDRs or GDRs that are “sponsored” are those where the foreign corporation whose shares are represented by the ADR, EDR or GDR is actively involved in the issuance of the ADR,
EDR or GDR and generally provides material information about the corporation to the U.S. market. An “unsponsored” ADR, EDR or GDR program is one where the foreign corporation whose shares are held by the
bank is not obligated to disclose material information in the United States, and, therefore, the
market value of the ADR, EDR or GDR may not reflect important facts known only to the foreign company.
Foreign debt securities include corporate debt securities of foreign issuers, certain
foreign bank obligations (see “Bank Instruments”) and U.S. dollar or foreign currency denominated obligations of foreign governments or their subdivisions, agencies and instrumentalities (see “Foreign Government Obligations”), international agencies and supranational entities.
The Funds consider various factors when determining whether a company is in a particular
country or in a particular region/continent, including whether (1) it is organized under the laws
of a country or in a country in a particular region/continent; (2) it has a principal office in a country or in a
country in a particular region/continent; (3) it derives 50% or more of its total revenues from businesses
in a country or in a country in a particular region/continent; (4) its securities are traded principally on a security
exchange, or in an over-the-counter (OTC) market, in a particular country or in a country in a particular region/continent;
and/or (5) its “country of risk" as determined by a third party service provider such as Bloomberg. The issuer's “country of risk” is determined based on a number of criteria, including its country of domicile, the primary stock exchange on which it trades, the location from which the majority of its revenue comes, and
its reporting currency.
Investments by a Fund in foreign securities, including ADRs, EDRs and GDRs, whether
denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below in
addition to those accompanying an investment in issuers in the United States.
10
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may
only invest in foreign securities denominated in U.S. dollars.
Currency Risk. The value in U.S. dollars of a Fund’s non-dollar-denominated foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign
security decreases when the value of the U.S. dollar rises against the foreign currency in which the security
is denominated and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many countries may not be as developed as that of the United States’ economy and may be subject to significantly different forces. Political, economic or social instability and development, expropriation or confiscatory taxation, and limitations
on the removal of funds or other assets could also adversely affect the value of portfolio investments. Certain
foreign companies may be subject to sanctions, embargoes, or other governmental actions that may impair or
otherwise limit the ability to invest in, receive, hold or sell the securities of such companies. These factors may
affect the value of investments in those companies. Certain companies may operate in, or have dealings with, countries that the U.S. government has identified as state sponsors of terrorism. As a result, such companies
may be subject to specific constraints or regulations under U.S. law and, additionally, may be subject
to negative investor perception, either of which could adversely affect such companies' performance. Further, war and military conflict between countries or in a region, for example the current conflicts in the
Ukraine and Middle East, may have an impact on the value of portfolio investments.
Regulatory Risk. Foreign companies may not be registered with the SEC and are generally not subject
to the regulatory controls and disclosure requirements imposed on U.S. issuers and, as
a consequence, there is generally less publicly available information about foreign securities than is available
about domestic securities. Foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards, corporate governance practices and requirements comparable to those applicable
to domestic companies. Therefore, financial information about foreign companies may be incomplete,
or may not be comparable to the information available on U.S. companies. Income from foreign securities
owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend
income payable to Fund shareholders.
There is generally less government supervision and regulation of securities exchanges,
brokers, dealers, and listed companies in foreign countries than in the U.S., thus increasing the risk
of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Foreign markets
may also have different clearance and settlement procedures. If a Fund experiences settlement problems, it
may result in temporary periods when a portion of that Fund’s assets are uninvested and could cause it to miss attractive investment opportunities or create a potential liability to that Fund arising out of its inability
to fulfill a contract to sell such securities.
Market Risk. Investing in foreign markets generally involves certain risks not typically associated
with investing in the United States. The securities markets in many foreign countries will
have substantially lower trading volume than the U.S. markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than comparable domestic securities. Obtaining
and/or enforcing judgments in foreign countries may be more difficult, and there is generally less
government regulation and supervision of foreign stock exchanges, brokers and issuers, each of which may make
it more difficult to enforce contractual obligations. Increased custodian costs as well as administrative
costs (such as the need to use foreign custodians) may also be associated with the maintenance of assets in
foreign jurisdictions. In addition, transaction costs in foreign securities markets are likely to be higher,
since brokerage commission rates in foreign countries are likely to be higher than in the United States.
Risks of Developing/Emerging Market Countries. Each Fund (except Invesco Government Money Market Fund, Invesco Short Duration Inflation Protected Fund and Invesco U.S. Government
Money Portfolio) may invest in securities of companies located in developing and emerging markets countries
subject to limits included in each Fund's prospectus.
Unless a Fund’s prospectus includes a different definition, the Fund considers developing and emerging
11
market countries to be those countries that are (i) generally recognized to be an
emerging market country by the international financial community, including the World Bank, (ii) determined by
the Adviser to be an emerging market country or (iii) its “country of risk” is an emerging market country as determined by a third party service provider such as Bloomberg. As of the date of this SAI, the Adviser considers “emerging market countries” to generally include every country in the world except those countries included in the MSCI World Index. The Adviser has broad discretion to identify countries that it considers to
be emerging market countries and may consider various factors in determining whether to classify a country as an
emerging market country, including a country’s relative interest rates, inflation rates, exchange rates, monetary and fiscal policies, trade and current account balances, legal and political developments and any other specific
factors the Adviser believes to be relevant. Because emerging market equity and emerging market debt are
distinct asset classes, a country may be deemed an emerging market country with respect to its equity
only, its debt only, both its equity and debt, or neither.
Investments in developing and emerging market countries present risks in addition
to, or greater than, those presented by investments in foreign issuers generally, and may include the following
risks:
i. Restriction, to varying degrees, on foreign investment in stocks;
ii. Repatriation of investment income, capital, and the proceeds of sales in foreign
countries may require foreign governmental registration and/or approval;
iii. Greater risk of fluctuation in the value of foreign investments due to changes
in currency exchange rates, currency control regulations or currency devaluation. In addition, there may
be higher rates of inflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity
to interest rate changes;
iv. Inflation and rapid fluctuations in inflation rates may have negative effects
on the economies and securities markets of certain developing and emerging market countries;
v. Many of the developing and emerging market countries’ securities markets are relatively small or less diverse, have low trading volumes, suffer periods of relative illiquidity, and are
characterized by significant price volatility;
vi. There is a risk in developing and emerging market countries that a future economic
or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory
taxation, seizure, nationalization, or creation of government monopolies;
vii. Investments in such securities markets may be subject to unexpected market closures;
viii. The taxation systems at the federal, regional and local levels in developing
or emerging market countries may be less transparent and inconsistently enforced, and subject to sudden
change. Developing or emerging market countries may also have a higher degree of corruption
and fraud than developed market countries, as well as counterparties and financial institutions with
less financial sophistication, creditworthiness and/or resources;
ix. Less developed legal systems allowing for enforcement of private property rights
and/or redress for injuries to private property, such as bankruptcy. The ability to bring and enforce
actions in developing or emerging market countries, or to obtain information needed to pursue or enforce such
actions, may be limited and shareholder claims may be difficult or impossible to pursue; and
x. Less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature
and quality of such information may vary. Information about such companies may be less available and reliable
and, therefore, the ability to conduct adequate due diligence in developing or emerging
markets may be limited which can impede the Fund's ability to evaluate such companies. In addition,
certain developing or emerging market countries may impose material limitations on Public Company Accounting
Oversight Board (“PCAOB”) inspection, investigation and enforcement capabilities which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in
12
certain developing or emerging markets. There is no guarantee that the quality of
financial reporting or the audits conducted by audit firms of developing or emerging market issuers meet
PCAOB standards.
Frontier Markets. The risks associated with investments in frontier market countries include all the
risks associated with investments in developing and emerging markets. These risks are magnified
for frontier market countries because frontier markets countries generally have smaller economies,
even less developed capital markets, and are traditionally less accessible than traditional emerging and
developing markets. As a result, investments in companies in frontier markets countries are generally subject
to a higher risk of loss than investments in companies in traditional emerging and developing market countries
due to less developed securities markets, different settlement procedures, greater price volatility, less
developed governments and economies, more government restrictions, and the limited ability of foreign entities
to participate in certain privatization programs. Investments in companies operating in frontier market countries
are highly speculative in nature.
Investing in Greater China Risk. Investments in companies located or operating in Greater China involve risks not associated with investments in Western nations, such as nationalization,
expropriation, or confiscation of property; lack of willingness or ability of the Chinese government to support the economies
and markets of the Greater China region; difficulty in obtaining and/or enforcing judgments; lack of publicly available information; alteration or discontinuation of economic reforms; military conflicts and the risk of war, either internal or with other countries; public health emergencies resulting in market closures, travel restrictions, quarantines or other interventions; inflation, currency fluctuations and fluctuations in inflation and interest rates that may have negative effects on the economy and securities markets
of Greater China; and Greater China’s dependency on the economies of other Asian countries, many of which are developing countries. Events in any one country within Greater China may impact the other countries
in the region or Greater China as a whole. For example, changes to their political and economic relationships
with the mainland China could adversely impact the Fund’s investments in Taiwan and Hong Kong.
Certain securities issued by companies located or operating in Greater China, such
as China A-shares, are subject to trading restrictions, quota limitations, and clearing and settlement
risks. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have
the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that
option in response to market volatility and other events. The liquidity of Chinese securities may shrink
or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse
investor perceptions, whether or not accurate.
Export growth continues to be a major driver of China’s rapid economic growth. As a result, a reduction in spending on Chinese products and services, the institution of tariffs, sanctions, capital controls, embargoes, trade wars, or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. The current political climate has intensified
concerns about a potential trade war between China and the United States, as each country has recently
imposed tariffs on the other country’s products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and
possible failure of individual companies and/or large segments of China’s export industry, which could have a negative impact on the Fund’s performance. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be
taken in the future. In addition, actions by the U.S. government, such as delisting of certain Chinese companies
from U.S. securities exchanges or otherwise restricting their operations in the United States, may negatively
impact the value of such securities held by the Fund. Further, from time to time, certain companies in
which the Fund invests may operate in, or have dealings with, countries subject to sanctions or embargoes imposed
by the U.S. government and the United Nations and/or in countries the U.S. government identified
as state sponsors of terrorism. One or more of these companies may be subject to constraints under U.S.
law or regulations that could negatively affect the company’s performance.
Additionally, developing countries, such as those in Greater China, may subject the Fund’s investments to a number of tax rules, and the application of many of those rules may be uncertain.
Moreover, China has
13
implemented a number of tax reforms in recent years, and may amend or revise its existing
tax laws and/or procedures in the future, possibly with retroactive effect. Changes in applicable
Chinese tax law could reduce the after-tax profits of the Fund, directly or indirectly, including by reducing the
after-tax profits of companies in China in which the Fund invests. Chinese taxes that may apply to the Fund’s investments include income tax or withholding tax on dividends, interest or gains earned by the Fund, business tax
and stamp duty. Uncertainties in Chinese tax rules could result in unexpected tax liabilities for
the Fund. Additionally, any difficulties of the PCAOB to inspect audit work papers and practices of PCAOB-registered
accounting firms in China with respect to their audit work of U.S. reporting companies may impose significant
additional risks associated with investments in China.
Risks of Investing in Chinese Variable Interest Entities. Many Chinese companies have created a special structure, which is based in China, known as a variable interest entity (“VIE”) as a means to circumvent limits on direct foreign ownership of equity in Chinese operating companies in certain sectors,
such as internet, media, education and telecommunications, imposed by the Chinese government. Typically
in such an arrangement, a China-based operating company establishes an offshore “holding” company in another jurisdiction that likely does not have the same disclosure, reporting, and governance
requirements as the United States. The holding company issues shares, i.e., is “listed”, on a foreign exchange such as the New York Stock Exchange or the Hong Kong Stock Exchange. The listed holding company enters
into service and other contracts with the China-based operating company, typically through the China-based
VIE. The VIE must be owned by Chinese nationals (and/or other Chinese companies), which often are the VIE’s founders, in order to obtain the licenses and/or assets required to operate in the restricted
or prohibited sector in China. The operations and financial position of the VIE are included in consolidated financial
statements of the listed holding company. Foreign investors, including mutual funds and ETFs (such as the Fund),
hold stock in the listed holding company rather than directly in the China-based operating company.
The VIE structure allows foreign shareholders to exert a degree of control and obtain
economic benefits arising from the operating company but without formal legal ownership because the listed holding company’s control over the operating company is predicated entirely on contracts with the VIE.
The listed holding company is distinct from the underlying operating company, and an investment in the
listed holding company represents exposure to a company that maintains service contracts with the operating
company, not equity ownership.
Investments in companies that use VIEs may pose additional risks because the investment
is made through the listed holding company’s service and other contractual arrangements with the underlying Chinese operating company. As a result, such investment may limit the rights of an investor
with respect to the underlying Chinese operating company. The contractual arrangements between the VIE
and the operating company may not be as effective in providing operational control as direct equity
ownership. The Chinese government could determine at any time and without notice that the underlying contractual
arrangements on which control of the VIE is based violate Chinese law. While VIEs are a longstanding
industry practice, well known to Chinese officials and regulators, VIEs historically have not been formally
recognized under Chinese law. The owners of the VIE could decide to breach the contractual arrangements with
the listed holding company and it is uncertain whether the contractual arrangements, which may be subject
to conflicts of interest between the legal owners of the VIE and foreign investors, would be enforced
by Chinese courts or arbitration bodies. Prohibitions of these structures by the Chinese government, or
the inability to enforce such contracts, from which the shell company derives its value, would likely cause the
VIE-structured holding(s) to suffer significant, detrimental, and possibly permanent loss, and in turn, adversely affect the Fund’s returns and net asset value.
The Chinese government previously placed restrictions on China-based companies raising
capital offshore in certain sectors, including through VIEs, and investors face uncertainty
about future actions by the Chinese government that could significantly affect the operating company’s financial performance and the enforceability of the contractual arrangements underlying the VIE structure. It is
uncertain whether Chinese officials or regulators will withdraw their acceptance of the VIE structure, generally, or with respect to certain industries, or whether any new laws, rules or regulations relating to VIE structures will be adopted
and what impact such laws may have on foreign investors. There is a risk that China might prohibit
the existence of
14
VIEs or sever their ability to transmit economic and governance rights to foreign
individuals and entities; if so, the market value of any associated portfolio holdings would likely suffer substantial,
detrimental, and possibly permanent loss.
Chinese companies, including those listed on U.S. exchanges, are generally not subject
to the same degree of regulatory requirements, accounting standards or auditor oversight as companies
in more developed countries. As a result, information about VIEs may be less reliable or complete.
Foreign companies with securities listed on U.S. exchanges, including those that utilize VIEs, may be
delisted if they do not meet the requirements of the listing exchange, the Public Company Accounting Oversight Board (“PCAOB”) and the U.S. government, which could significantly decrease the liquidity and value of such
securities. Actions by the U.S. government, such as delisting of certain Chinese companies from U.S. securities
exchanges or otherwise restricting their operations in the U.S., may negatively impact the liquidity
and value of such securities.
Risks of Investments in China A-shares through the Stock Connect Program. The Shanghai-Hong Kong Stock Connect program and the Shenzhen-Hong Kong Stock Connect program (both
programs collectively referred to as the Stock Connect Program) are securities trading and clearing programs through which the Funds can trade eligible listed China A-shares. The Stock Connect Program is subject to quota limitations, which may restrict or preclude a fund's ability to invest in Stock Connect securities. Foreign investors, individually and in the aggregate, are subject to ownership limitations from Shanghai or Shenzhen listed companies, including those purchased through the Stock Connect Program. Once the daily quota is reached, orders to purchase additional China A-shares through the Stock Connect Program will be rejected. Only certain China A-shares are eligible to be accessed through the Stock Connect Program. Such securities may lose their eligibility at any time, in which case they could be sold but could
no longer be purchased through the Stock Connect Program. Because the Stock Connect Program is still relatively in its early stages, the actual effect on the market for trading China A-shares with the introduction of
large numbers of foreign investors is currently unknown. The Stock Connect Program is subject to regulations promulgated by regulatory authorities for the Shanghai Stock Exchange, the Stock Exchange of Hong
Kong Limited, and the Shenzhen Stock Exchange, and further regulations or restrictions, such as limitations
on redemptions or suspension of trading, may adversely impact the Stock Connect Program, if the authorities believe it necessary to assure orderly markets or for other reasons. There is no guarantee that
all three exchanges will continue to support the Stock Connect Program in the future and no assurance that further regulations will not adversely affect the availability of securities under Stock Connect or other operational
arrangements.
Investments in China A-shares may not be covered by the securities investor protection
programs of the exchanges and, without the protection of such programs, will be subject to the risk
of default by the broker. In the event that the depository of the Shanghai Stock Exchange and the Shenzhen Stock
Exchange defaulted, a Fund may not be able to recover fully its losses from the depository or may be delayed
in receiving proceeds as part of any recovery process. In addition, because all trades on the Stock Connect Program in respect of eligible China A-shares must be settled in Renminbi (RMB), the Chinese
currency, the Funds investing through the Stock Connect Program must have timely access to a reliable supply of offshore RMB, which cannot be guaranteed. The existence of a liquid trading market for China A-shares
may depend on whether there is supply of, and demand for, such China A-shares. Market volatility
and settlement difficulties in the China A-shares markets may also result in significant fluctuations in the prices
of the securities traded on such markets.
China A-shares purchased through the Stock Connect Program are held in nominee name and not the Fund’s name as the beneficial owner. It is possible, therefore, that a Fund’s ability to exercise its rights as a shareholder and to pursue claims against the issuer of China A-shares may be limited
because the nominee structure has not been tested in Chinese courts, as Chinese courts generally have
limited experience in applying the concept of beneficial ownership and the law in that area continues to
evolve. In addition, a Fund may not be able to participate in corporate actions affecting China A-shares held
through the Stock Connect Program due to time constraints or for other operational reasons.
15
Trades on the Stock Connect Program are subject to certain requirements prior to trading. If these requirements are not completed prior to the market opening, a Fund cannot sell the
shares on that trading day. In addition, these requirements may limit the number of brokers that a Fund may
use to execute trades. Additionally, there are foreign ownership limitations that may result in limitations on investment or the return of profits if a fund purchases and sells shares of an issuer in which it owns above a
certain threshold determined by China's securities rules. As a result, a Fund may not be able to execute trading freely in accordance with its investment strategy and the profits that the Fund derives from such investments may be limited.
Risks of Investments in the China Interbank Bond Market through the Bond Connect Program. Certain Funds may invest in China onshore bonds traded on the China Interbank Bond Market (“CIBM”) through the China – Hong Kong Bond Connect Program (“Bond Connect”). In China, the Hong Kong Monetary Authority Central Moneymarkets Unit holds Bond Connect securities on behalf
of ultimate investors (such as the Funds) in accounts maintained with a China-based custodian (either the
China Central Depository & Clearing Co. or the Shanghai Clearing House). This recordkeeping system
subjects a Fund to various risks, including the risks of settlement delays and counterparty default of
the China custodian and Hong Kong custody agent. In addition, the Fund may have a limited ability to enforce
rights as a bondholder because enforcing the ownership rights of a beneficial holder of Bond Connect securities
is untested and courts in China have limited experience in applying the concept of beneficial ownership.
Bond Connect uses the trading infrastructure of both Hong Kong and China and is not
available on trading holidays in Hong Kong. As a result, prices of securities purchased through
Bond Connect may fluctuate at times when the Fund is unable to add to or exit its position. Securities
offered through Bond Connect may lose their eligibility for trading through Bond Connect at any time. If
Bond Connect securities lose their eligibility for trading through Bond Connect, they may be sold but can
no longer be purchased through Bond Connect.
Because Bond Connect trades are settled in RMB, the Funds investing through Bond Connect
must have timely access to a reliable supply of offshore RMB, which cannot be guaranteed.
Market volatility and potential lack of liquidity due to low trading volume of certain
bonds on the CIBM may result in prices of such bonds fluctuating significantly, exposing a Fund to liquidity
and volatility risks. The bid-ask spreads of the prices of such securities may be large, and a Fund may therefore incur
significant costs and may suffer losses when selling such investments. Bonds traded on the CIBM may
be difficult or impossible to sell, which may impact a Fund’s ability to acquire or dispose of such securities at their expected prices.
Bond Connect is relatively new and its effects on the Chinese interbank bond market
are uncertain. Trading through Bond Connect is performed through newly developed trading platforms
and operational systems, and in the event of systems malfunctions or extreme market conditions, trading
via Bond Connect could be disrupted. There can be no assurance as to Bond Connect’s continued existence or whether future developments regarding Bond Connect (including further interpretation and guidance
provided by regulators in Hong Kong and China) may restrict or adversely affect the Fund’s investments or returns. Finally, uncertainties in China tax rules governing taxation of income and gains from investments
via Bond Connect could result in unexpected tax liabilities for a Fund.
Risks Related to Armed Conflict. As a result of increasingly interconnected global economies and financial markets, armed conflict between countries or in a geographic region, for
example the current conflicts between Russia and Ukraine in Europe and Hamas and Israel in the Middle
East, has the potential to adversely impact Fund investments. Such conflicts, and other corresponding events,
have had, and could continue to have, severe negative effects on regional and global economic and financial
markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts
may be particularly acute in certain sectors. The timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on
Fund performance and the value of an investment in the Fund, even beyond any direct investment exposure the
Fund may have to issuers located in or with significant exposure to an impacted country or geographic
region.
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Risks Related to Russian Invasion of Ukraine. In late February 2022, Russian military forces invaded Ukraine, significantly amplifying already existing geopolitical tensions among
Russia, Ukraine, Europe, the North Atlantic Treaty Organization (NATO), and the West. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential for wider conflict may increase financial market volatility and could have severe adverse effects on regional and
global economic markets, including the markets for certain securities and commodities such as oil
and natural gas.
Following Russia’s actions, various countries, including the U.S., Canada, the United Kingdom, Germany, and France, among others, as well as the European Union, issued broad-ranging
economic sanctions against Russia. The sanctions freeze certain Russian assets and prohibit
trading by individuals and entities in certain Russian securities, engaging in certain private
transactions, and doing business with certain Russian corporate entities, large financial institutions, officials
and oligarchs. The sanctions include a commitment by certain countries and the European Union to remove
selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications,
commonly called “SWIFT,” the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions.
A number of large corporations have since withdrawn from Russia or suspended or curtailed their Russia-based
operations.
The imposition of these current sanctions (and the potential for further sanctions
in response to Russia’s continued military activity) and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, including, but not limited
to, the financials, energy, metals and mining, engineering, and defense and defense-related materials
sectors. Such actions also may result in the decline of the value and liquidity of Russian securities,
a weakening of the ruble, and could impair the ability of a Fund to buy, sell, receive, or deliver those
securities. Moreover, the measures could adversely affect global financial and energy markets and thereby
negatively affect the value of a Fund’s investments beyond any direct exposure to Russian issuers or those of adjoining geographic regions.
In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia also prevented the export of certain goods
and payments to foreign shareholders of Russian securities. Russia may take additional countermeasures
or retaliatory actions, which may further impair the value and liquidity of Russian securities and
Fund investments. Such actions could, for example, include restricting gas exports to other countries,
the seizure of U.S. and European residents’ assets, or undertaking or provoking other military conflict elsewhere in Europe, any of which could exacerbate negative consequences on global financial markets and
the economy. The actions discussed above could have a negative effect on the performance of Funds
that have exposure to Russia. While diplomatic efforts have been ongoing, the conflict between
Russia and Ukraine is unpredictable and has the potential to result in broader military actions.
The duration of the ongoing conflict and corresponding sanctions and related events cannot be predicted
and may result in a negative impact on Fund performance and the value of Fund investments, particularly
as it relates to Russian exposure.
Passive Foreign Investment Companies. Under U.S. tax laws, passive foreign investment companies (PFICs) are those foreign corporations which generate primarily “passive” income. Passive income is defined as any income that is considered foreign personal holding company income under the
Internal Revenue Code of 1986, as amended (Code). For federal tax purposes, a foreign corporation is deemed
to be a PFIC if 75% or more of its gross income during a taxable year is passive income or if 50% or more
of its assets during a taxable year are assets that produce, or are held to produce, passive income.
Foreign mutual funds are generally deemed to be PFICs, since nearly all of the income
of a mutual fund is passive income. Foreign mutual funds investments may be used to gain exposure to the
securities of companies in countries that limit or prohibit direct foreign investment; however,
investments in foreign mutual funds by a Fund are subject to limits under the Investment Company Act.
17
Other types of foreign corporations may also be considered PFICs if their percentage
of passive income or passive assets exceeds the limits described above. A determination as to whether
a foreign corporation is considered a PFIC is based on an interpretation of complex provisions of the tax law.
Accordingly, there can be no assurance that a conclusion regarding a corporation's status as a PFIC will
not be challenged by the Internal Revenue Service (IRS) and conclusions as to a corporation's PFIC status may
vary depending on who is doing the analysis. Unless a Fund makes an election with respect to its investment
in a PFIC, which election may not always be possible, income from the disposition of a PFIC investment
and from certain PFIC distributions may be subject to adverse tax treatment. The application of the PFIC
rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, and may subject a Fund to tax on certain income from
PFIC shares. Federal tax laws impose severe tax penalties for failure to properly report investment income
from PFICs. Although every effort is made to ensure compliance with federal tax reporting requirements for these
investments, foreign corporations that are PFICs for federal tax purposes may not always be recognized
as such or may not provide a Fund with all information required to report, or make an election with respect
to, such investment.
A foreign issuer will not be treated as a PFIC with respect to a shareholder if such
issuer is a controlled foreign corporation for U.S. federal income tax purposes (CFC) and the shareholder
holds (directly, indirectly, or constructively) 10% or more of the voting interests in or total value of such issuer.
In such a case, the shareholder generally would be required to include in gross income each year, as ordinary
income, its share of certain amounts of a CFC’s income, whether or not the CFC distributes such shareholder’s share of such amounts to it. Under proposed regulations, such income will be considered “qualifying income” for purposes of a shareholder’s qualification as a regulated investment company only to the extent such income is timely distributed to that shareholder.
Additional risks of investing in other investment companies are described under “Other Investment Companies.”
Foreign Government Obligations. Each Fund other than Invesco Short Duration Inflation Protected Fund may invest in debt securities of foreign governments. Debt securities issued
by foreign governments are often, but not always, supported by the full faith and credit of the foreign governments,
or their subdivisions, agencies or instrumentalities, that issue them. These securities involve the risks
discussed above under “Foreign Securities”. Additionally, the issuer of the debt or the governmental authorities that control repayment of the debt may be unwilling or unable to pay interest or repay principal when due.
Political or economic changes or the balance of trade may affect a country’s willingness or ability to service its debt obligations. Periods of economic uncertainty may result in the volatility of market prices of sovereign
debt obligations, especially debt obligations issued by the governments of developing countries. Foreign
government obligations of developing countries, and some structures of emerging market debt securities,
both of which are generally below investment grade, are sometimes referred to as “Brady Bonds.” The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance,
or repay principal or interest when due may result in the cancellation of third-party commitments to
lend funds to the sovereign debtor, which may impair the debtor’s ability or willingness to service its debts.
Foreign Exchange Transactions. Each Fund (except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio) may invest in foreign currency-denominated
securities and has the authority to purchase and sell put and call options on foreign currencies (foreign
currency options), foreign currency futures contracts and related options, and currency-related swaps, and may
engage in foreign currency transactions either on a spot (i.e., for prompt delivery and settlement)
basis at the rate prevailing in the currency exchange market at the time or through forward foreign currency contracts (see “Forward Foreign Currency Contracts”). The use of these instruments may result in a loss to a Fund if the counterparty to the transaction (particularly with respect to OTC derivatives, as discussed further
below) does not perform as promised, including because of such counterparty’s bankruptcy or insolvency.
The Funds will incur costs in converting assets from one currency to another. Foreign
exchange dealers may charge a fee for conversion. In addition, dealers may realize a profit based on
the difference between the prices at which they buy and sell various currencies in the spot and forward markets.
18
A Fund will generally engage in these foreign exchange transactions in order to complete
a purchase or sale of foreign currency denominated securities. The Funds may also use foreign currency
options, forward foreign currency contracts, foreign currency futures contracts and currency-related
swap contracts to increase or reduce exposure to a foreign currency, to shift exposure from one foreign currency
to another in a cross currency hedge or to enhance returns. These transactions are intended to minimize
the risk of loss due to a decline in the value of the hedged currencies; however, at the same time, they tend
to limit any potential gain which might result should the value of such currencies increase.
A Fund may purchase and sell foreign currency futures contracts and purchase and write
foreign currency options to increase or decrease its exposure to different foreign currencies. A Fund
may also purchase and write foreign currency options in connection with foreign currency futures contracts
or forward foreign currency contracts. Foreign currency futures contracts are traded on exchanges and have standard
contract sizes and delivery dates. Most foreign currency futures contracts call for payment or delivery
in U.S. dollars. The uses and risks of foreign currency futures contracts are similar to those of futures contracts
relating to securities or indices (see “Futures Contracts”). Foreign currency futures contracts’ values can be expected to correlate with exchange rates but may not reflect other factors that affect the value of the Fund’s investments.
Whether or not any hedging strategy will be successful is highly uncertain, and use
of hedging strategies may leave a Fund in a less advantageous position than if a hedge had not been established.
Moreover, it is impossible to forecast with precision the market value of portfolio securities at
the expiration of a forward foreign currency contract. Accordingly, a Fund may be required to buy or sell additional
currency on the spot market (and bear the expense of such transaction) if Invesco’s or the Sub-Advisers’ predictions regarding the movement of foreign currency or securities markets prove inaccurate.
Certain Funds may hold a portion of their assets in bank deposits denominated in foreign
currencies, so as to facilitate investment in foreign securities as well as protect against currency
fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To
the extent these monies are converted back into U.S. dollars, the value of the assets so maintained will be
affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations.
Foreign exchange transactions may involve some of the risks of investments in foreign securities.
For a discussion of tax considerations relating to foreign currency transactions, see “Dividends, Distributions and Tax Matters — Tax Matters — Tax Treatment of Portfolio Transactions — Foreign currency transactions.”
Under definitions adopted by the Commodity Futures Trading Commission (CFTC) and the
U.S. Securities and Exchange Commission (SEC), non-deliverable foreign exchange forwards
and OTC foreign exchange options are considered “swaps.” These instruments are therefore included in the definition of “commodity interests” for purposes of determining whether fund service providers qualify for certain exemptions and exclusions from regulation by the CFTC. Although non-deliverable forward
foreign currency contracts have historically been traded in the OTC market, as swaps they may in the
future be regulated to be centrally cleared and traded on public execution facilities. For more information, see “Forward Foreign Currency Contracts” and “Swaps.”
Floating Rate Corporate Loans and Corporate Debt Securities of Non-U.S. Borrowers. Floating rate loans and debt securities made to and issued by non-U.S. borrowers in which the Funds
invest will be U.S. dollar-denominated or otherwise provide for payment in U.S. dollars, and the borrower
will meet the credit quality standards established by Invesco and the Sub-Advisers for U.S. borrowers.
The Funds similarly may invest in floating rate loans and floating rate debt securities made to and issued
by U.S. borrowers with significant non-U.S. dollar-denominated revenues; provided that the loans are U.S.
dollar-denominated or otherwise provide for payment to the Funds in U.S. dollars. In all cases where the
floating rate loans or floating rate debt securities are not denominated in U.S. dollars, provisions will
be made for payments to the lenders, including the Funds, in U.S. dollars pursuant to foreign currency swaps.
Foreign Bank Obligations. Foreign bank obligations include certificates of deposit, banker’s acceptances and fixed time deposits and other obligations (a) denominated in U.S.
dollars and issued by a foreign branch of a domestic bank (Eurodollar Obligations), (b) denominated in U.S.
dollars and issued by a
19
domestic branch of a foreign bank (Yankee Dollar Obligations), or (c) issued by foreign
branches of foreign banks. Foreign banks are not generally subject to examination by any U.S. government
agency or instrumentality.
Foreign Currency Warrants. Foreign currency warrants entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars)
which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified
foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants
generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants
have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers
in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers
of the securities, is inherent in the international fixed income marketplace.
Foreign currency warrants may attempt to reduce the foreign exchange risk assumed
by purchasers of a security by, for example, providing for a supplemental payment in the event that the
U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen or the euro.
The formula used to determine the amount payable upon exercise of a foreign currency warrant may make
the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction
(i.e., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which
the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which
they may be offered, and may be listed on exchanges.
Foreign currency warrants may be exercisable only in certain minimum amounts, and
an investor wishing to exercise warrants who possesses less than the minimum number required for exercise
may be required either to sell the warrants or to purchase additional warrants, thereby incurring
additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a
holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined,
during which time the exchange rate could change significantly, thereby affecting both the market and
cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated
if the warrants should be delisted from an exchange or if their trading should be suspended permanently,
which would result in the loss of any remaining “time value” of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case where the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants.
Foreign currency warrants generally are unsecured obligations of their issuers and
are not standardized foreign currency options issued by the Options Cleaning Corporation (OCC). Unlike
foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be amended
in the event of governmental or regulatory actions affecting exchange rates or in the event of the
imposition of other regulatory controls affecting the international currency markets. The initial public
offering price of foreign currency warrants is generally considerably in excess of the price that a commercial
user of foreign currencies might pay in the interbank market for a comparable option involving significantly
larger amounts of foreign currencies. Foreign currency warrants are subject to complex political or economic
factors.
Performance Indexed Paper. Performance indexed paper is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield
to the investor on performance indexed paper is between the U.S. dollar and a designated currency as
of or about that time (generally, the index maturity two days prior to maturity). The yield to the investor
will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed
minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment
corresponding to the minimum and maximum values of the spot exchange rate two business days prior to
maturity.
Exchange-Traded Funds
Exchange-Traded Funds (ETFs). Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may purchase shares of ETFs. Most ETFs are
registered under the
20
1940 Act as investment companies, although others may not be registered as investment
companies and are registered as commodity pools. Therefore, a Fund’s purchase of shares of an ETF may be subject to the restrictions on investments in other investment companies discussed under “Other Investment Companies.” ETFs have management fees, which increase their cost. The Fund may invest in ETFs
advised by unaffiliated advisers as well as ETFs advised by Invesco Capital Management LLC (Invesco Capital).
Invesco, the Sub-Advisers and Invesco Capital are affiliates of each other as they are all indirect wholly-owned
subsidiaries of Invesco Ltd.
Generally, ETFs hold portfolios of securities, commodities and/or currencies that
are designed to replicate, as closely as possible before expenses, the performance of a specified
market index. The performance results of ETFs will not replicate exactly the performance of the pertinent
index due to transaction and other expenses, including fees to service providers, borne by ETFs.
Furthermore, there can be no assurance that the portfolio of securities, commodities and/or currencies purchased
by an ETF will replicate a particular index. Some ETFs are actively managed and instead of replicating
a particular index they seek to outperform it, or outperform a basket of securities or price of a commodity
or currency.
Only Authorized Participants (APs) may engage in creation or redemption transactions
directly with ETFs. ETF shares are sold to and redeemed by APs at net asset value only in large blocks
called creation units and redemption units, respectively. Such market makers have no obligation to submit creation
or redemption orders; consequently, there is no assurance that market makers will establish or maintain
an active trading market for ETF shares. In addition, to the extent that APs exit the business or are
unable to proceed with creation and/or redemption orders with respect to an ETF and no other AP is able to
step forward to create or redeem units of an ETF, an ETF’s shares may be more likely to trade at a premium or discount to net asset value and possibly face trading halts and/or delisting. ETF shares may be purchased
and sold by all other investors in secondary market trading on national securities exchanges, which allows
investors to purchase and sell ETF shares at their market price throughout the day.
Investments in ETFs generally present the same primary risks as an investment in a
conventional mutual fund that has the same investment objective, strategy and policies. Investments in
ETFs further involve the same risks associated with a direct investment in the types of securities, commodities
and/or currencies included in the indices the ETFs are designed to replicate. In addition, shares of
an ETF may trade at a market price that is higher or lower than their net asset value and an active trading
market in such shares may not develop or continue. Moreover, trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action to be appropriate, the shares are de-listed from the exchange, or
the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Exchange-Traded Notes
Exchange-Traded Notes (ETNs). ETNs are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market benchmark or strategy,
minus applicable fees. ETNs are traded on an exchange (e.g., the New York Stock Exchange) during normal trading
hours; however, investors can also hold the ETN until maturity. At maturity, the issuer pays to the
investor a cash amount equal to the principal amount, subject to the day’s market benchmark or strategy factor. ETNs do not make periodic coupon payments or provide principal protection. ETNs are subject to credit risk,
including the credit risk of the issuer, and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may
also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of
liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests
in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. A decision to sell
ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may
be listed on an exchange, the issuer may not be required to maintain the listing, and there can be no assurance
that a secondary market will exist for an ETN.
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ETNs are also subject to tax risk. No assurance can be given that the Internal Revenue
Service (IRS) will accept, or a court will uphold, how ETNs are characterized or treated for tax purposes.
Further, the IRS and Congress are considering proposals that would change the timing and character of income
and gains from ETNs.
An ETN that is tied to a specific market benchmark or strategy may not be able to
replicate and maintain exactly the composition and relative weighting of securities, commodities or other
components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times,
be relatively illiquid, and thus they may be difficult to purchase or sell at a fair price. Leveraged ETNs
are subject to the same risk as other instruments that use leverage in any form.
The market value of ETNs may differ from their market benchmark or strategy. This
difference in price may be due to the fact that the supply and demand in the market for ETNs at any point
in time is not always identical to the supply and demand in the market for the securities, commodities or
other components underlying the market benchmark or strategy that the ETN seeks to track. As a result,
there may be times when an ETN trades at a premium or discount to its market benchmark or strategy.
Debt Investments
U.S. Government Obligations. U.S. government obligations are obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities, including bills, notes and bonds
issued by the U.S. Treasury, as well as “stripped” or “zero coupon” U.S. Treasury obligations.
U.S. government obligations may be, (i) supported by the full faith and credit of
the U.S. Treasury, (ii) supported by the right of the issuer to borrow from the U.S. Treasury, (iii) supported
by the discretionary authority of the U.S. government to purchase the agency’s obligations, or (iv) supported only by the credit of the instrumentality. There is a risk that the U.S. government may choose not to provide
financial support to U.S. government-sponsored agencies or instrumentalities if it is not legally obligated
to do so. In that case, if the issuer were to default, a Fund holding securities of such issuer might not be
able to recover its investment from the U.S. government. For example, while the U.S. government has provided financial
support to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC),
no assurance can be given that the U.S. government will always do so, since the U.S.
government is not so obligated by law. There also is no guarantee that the government would support Federal
Home Loan Banks. Accordingly, securities of FNMA, FHLMC and Federal Home Loan Banks, and other agencies,
may involve a risk of non-payment of principal and interest. Any downgrade of the credit rating
of the securities issued by the U.S. government may result in a downgrade of securities issued by its agencies or
instrumentalities, including government-sponsored entities. Additionally, from time to time uncertainty regarding
the status of negotiations in the U.S. government to increase the statutory debt limit, commonly called the “debt ceiling,” could increase the risk that the U.S. government may default on payments on certain U.S. government
securities, cause the credit rating of the U.S. government to be downgraded, increase volatility in the
stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or
increase the costs of various kinds of debt. If a U.S. government-sponsored entity is negatively impacted by legislative
or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance
of a Fund that holds securities of that entity will be adversely impacted.
Inflation-Indexed Bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common.
The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value
of the bond. Most other issuers pay out the Consumer Price Index (CPI) accruals as part of a semiannual coupon.
Inflation-indexed securities issued by the U.S. Treasury have maturities of five,
ten or thirty years, although it is possible that securities with other maturities will be issued in the
future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the
inflation-adjusted principal amount. For example, if a fund purchased an inflation-indexed bond with a par value
of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and inflation over the first six
months was 1%, the mid-year par value of the bond would be $1,010 and the first semi-annual interest payment
would be $15.15
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($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole years’ inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second
semiannual interest payment would be $15.45 ($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the principal value of
inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated
with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal
upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed
bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and
will fluctuate. The Fund may also invest in other inflation related bonds which may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid
at maturity may be less than the original principal.
The value of inflation-indexed bonds is expected to change in response to changes
in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest
rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates,
real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal
interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease
in value of inflation-indexed bonds.
While these securities are expected to be protected from long-term inflationary trends,
short-term increases in inflation may lead to a decline in value. If interest rates rise due
to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities
may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price
Index for Urban Consumers (CPI-U), which is calculated monthly by the U.S. Bureau of Labor Statistics.
The CPI-U is a measurement of changes in the cost of living, made up of components such as housing,
food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted
to reflect a comparable inflation index, calculated by that government. There can be no assurance
that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the
prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country
will be correlated to the rate of inflation in the United States.
Any increase in the principal amount of an inflation-indexed bond will be considered
taxable ordinary income, even though investors do not receive their principal until maturity.
Temporary Investments. Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may invest a portion of its respective assets in affiliated
money market funds or in other types of money market instruments in which those funds would invest or other
short-term U.S. government securities for cash management purposes. Each Fund except Invesco Government
Money Market Fund and Invesco U.S. Government Money Portfolio may invest up to 100% of its
assets in investments that may be inconsistent with the Fund's principal investment strategies
for temporary defensive purposes in anticipation of or in response to adverse market, economic, political
or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions. Invesco
Government Money Market Fund and Invesco U.S. Government Money Portfolio may, from time to time, take
temporary defensive positions by holding cash, shortening the Fund’s dollar-weighted average portfolio maturity or investing in other securities that are Eligible Securities for purchase by money market funds as
described below, in anticipation of or in response to adverse market, economic, political or other market
conditions, or atypical circumstances such as unusually large cash inflows or redemptions. As a result, a Fund may not achieve its investment objective.
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may
experience situations where it is unable to invest money that it has received overnight such
as when it receives cash inflows after the overnight repurchase markets have closed. The Funds are permitted
to leave balances in
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their accounts with the Bank of New York Mellon (BNY Mellon), their custodian bank.
To compensate the Funds for such activity, the Funds may receive compensation from BNY Mellon at an
agreed upon rate.
Changing Interest Rates. In a low or negative interest rate environment, debt securities may trade at, or
be issued with, negative yields, which means the purchaser of the security may receive
at maturity less than the total amount invested. In addition, in a negative interest rate environment, if
a bank charges negative interest, instead of receiving interest on deposits, a depositor must pay the bank
fees to keep money with the bank. To the extent a Fund holds a negatively-yielding debt security or has a bank
deposit with a negative interest rate, the Fund would generate a negative return on that investment. Cash
positions may also subject a Fund to increased counterparty risk to the Fund's bank. Debt market conditions are
highly unpredictable and some parts of the market are subject to dislocations. In the past, the U.S. government
and certain foreign central banks have taken steps to stabilize markets by, among other things, reducing
interest rates. To the extent such actions are pursued, they present heightened risks to debt securities,
and such risks could be even further heightened if these actions are unexpectedly or suddenly reversed or
are ineffective in achieving their desired outcomes. In recent years, the U.S. government began implementing increases
to the federal funds interest rate and there may be further rate increases. As interest rates rise,
there is risk that rates across the financial system also may rise. To the extent rates increase substantially
and/or rapidly, the Funds may be subject to significant losses.
In a low or negative interest rate environment, some investors may seek to reallocate
assets to other income-producing assets. This may cause the price of such higher yielding instruments
to rise, could further reduce the value of instruments with a negative yield, and may limit a Fund's ability
to locate fixed income instruments containing the desired risk/return profile. Changing interest rates, including,
rates that fall below zero, could have unpredictable effects on the markets and may expose fixed income
markets to heightened volatility, increased redemptions, and potential illiquidity.
With respect to a money market fund, which seeks to maintain a stable $1.00 price
per share, a low or negative interest rate environment could impact the money market fund’s ability to maintain a stable $1.00 share price. During a negative interest rate environment causing a money market fund to have a negative gross yield, the money market fund may reduce the number of shares outstanding on a pro rata basis
through reverse distribution mechanisms or other mechanisms to seek to maintain a stable $1.00 price per share, subject to approval of the board of trustees of the money market fund and to the extent permissible by applicable law and its organizational documents. A money market fund that implements share cancellation would continue to maintain a stable $1.00 share price by use of the amortized cost
method of valuation and/or penny rounding method but the value of an investor’s investment would decline if the fund reduces the number of shares held by the investor. Alternatively, the money market fund may discontinue using the amortized cost method of valuation to maintain a stable $1.00 price per share and
establish a fluctuating NAV per share rounded to four decimal places by using available market quotations or equivalents. A money market fund that floats its NAV would no longer maintain a stable $1.00 share price
and instead have a share price that fluctuates. An investor in a money market fund that floats its NAV would
lose money if the investor sells their shares when they are worth less than what the investor originally paid
for them.
Mortgage-Backed and Asset-Backed Securities. Mortgage-backed and asset-backed securities include commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities
(RMBS). Mortgage-backed securities are mortgage-related securities issued or guaranteed by
the U.S. government, its agencies and instrumentalities, or issued by non-government entities, such as commercial
banks and other private lenders. Mortgage-related securities represent ownership in pools of mortgage
loans assembled for sale to investors by various government agencies such as the Government National Mortgage
Association (GNMA) and government-related organizations such as the FNMA and the FHLMC, as well
as by non-government issuers such as commercial banks, savings and loan institutions, mortgage bankers
and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the security, which may fluctuate,
is not so secured. These securities differ from conventional bonds in that the principal is paid back to the
investor as payments are made on the underlying mortgages in the pool. Accordingly, a Fund receives monthly
scheduled payments of principal and interest along with any unscheduled principal prepayments on the underlying
mortgages.
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Because these scheduled and unscheduled principal payments must be reinvested at prevailing
interest rates, mortgage-backed securities do not provide an effective means of locking in
long-term interest rates for the investor. Although the value of a mortgage-backed security may decline when interest
rates rise, the converse is not necessarily true, since in periods of declining interest rates the
mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average
life of the security and shortening the period of time over which income at the higher rate is received. When
interest rates are rising, the rate of prepayment tends to decrease, thereby lengthening the period of time over
which income at the lower rate is received. For these and other reasons, a mortgage-backed security's
average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore,
it is not possible to predict accurately the security's return.
There are a number of important differences among the agencies and instrumentalities of
the U.S. government that issue mortgage-related securities and among the securities they issue.
Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known
as Ginnie Maes) which are guaranteed as to the timely payment of principal and interest. That guarantee
is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly-owned by the U.S.
government within the Department of Housing and Urban Development. Mortgage-related securities issued by
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as Fannie Maes) and are
guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with
the U.S. Treasury. FNMA is a government-sponsored entity (GSE) wholly-owned by public stockholders. Mortgage-related
securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as Freddie
Macs) and are guaranteed as to payment of principal and interest by FHLMC itself and backed by a
line of credit with the U.S. Treasury. FHLMC is a GSE wholly-owned by public stockholders.
Another type of mortgage-related security issued by GSEs, such as FNMA and FHLMC,
is credit risk transfer securities. GSE credit risk transfer securities are unguaranteed and unsecured
fixed or floating rate general obligations issued by GSEs, which are typically issued at par and have stated
final maturities. In addition, GSE credit risk transfer securities are structured so that: (i) interest
is paid directly by the issuing GSE; and (ii) principal is paid by the issuing GSE in accordance with the principal
payments and default performance of a pool of residential mortgage loans acquired by the GSE. The issuing
GSE selects the pool of mortgage loans based on that GSE’s eligibility criteria, and the performance of the credit risk transfer securities will be directly affected by the selection of such underlying mortgage
loans.
GSE credit risk transfer securities are not directly linked to or backed by the underlying
mortgage loans. Thus, although the payment of principal and interest on such securities is tied to
the performance of the pool of underlying mortgage loans, in no circumstances will the actual cash flow from the
underlying mortgage loans be paid or otherwise made available to the holders of the securities and the
holders of the securities will have no interest in the underlying mortgage loans. As a result, in the event that
a GSE fails to pay principal or interest on its credit risk transfer securities or goes through a bankruptcy, insolvency
or similar proceeding, holders of such credit risk transfer securities will have no direct recourse to the
underlying mortgage loans. Such holders will receive recovery on par with other unsecured note holders (agency
debentures) in such a scenario.
GSE credit risk transfer securities are issued in multiple tranches, which are allocated
certain principal repayments and credit losses corresponding to the seniority of the particular tranche.
Each tranche will have credit exposure to the underlying mortgage loans and the yield to maturity will be
directly related to the amount and timing of certain defined credit events on the underlying mortgage loans,
any prepayments by borrowers and any removals of a mortgage loan from the pool. Because credit risk exposure
is allocated in accordance with the seniority of the particular tranche, principal losses will be
first allocated to the most junior or subordinate tranches, thus making the most subordinate tranches subject to increased
sensitivity to dramatic housing downturns. In addition, many credit risk transfer securities have
collateral performance triggers (such as those based on credit enhancement, delinquencies or defaults) that
could shut off principal payments to subordinate tranches.
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The risks associated with an investment in GSE credit risk transfer securities will
be different than the risks associated with an investment in mortgage-backed securities issued by GSEs,
because some or all of the mortgage default or credit risk associated with the underlying mortgage loans
in credit risk transfer securities is transferred to investors, such as the Fund. As a result, investors in
GSE credit risk transfer securities could lose some or all of their investment in these securities if the underlying
mortgage loans default.
The Funds may also invest in credit risk transfer securities issued by private entities,
such as banks or other financial institutions. Credit risk transfer securities issued by private entities
are structured similarly to those issued by GSEs, and are generally subject to the same types of risks, including
credit, prepayment, extension, interest rate and market risks.
On September 7, 2008, FNMA and FHLMC were placed under the conservatorship of the
Federal Housing Finance Agency (FHFA) to provide stability in the financial markets, mortgage
availability and taxpayer protection by preserving FNMA and FHLMC’s assets and property and putting FNMA and FHLMC in a sound and solvent position.
Since 2009, both FNMA and FHLMC have received significant capital support through
U.S. Treasury preferred stock purchases and Federal Reserve purchases of the entities’ mortgage-backed securities.
In February 2011, the Obama Administration produced a report to Congress outlining
proposals to wind down FNMA and FHLMC and reduce the government’s role in the mortgage market. Discussions among policymakers continue as to whether FNMA and FHLMC should be nationalized, privatized, restructured, or
eliminated altogether. Such discussions create uncertainty as to FNMA’s future including how long FNMA will continue to exist in its current form, the extent of its role in the market, how long
it will be in conservatorship, what form it will have and what ownership interest, if any, current common and preferred
stockholders will hold after the conservatorship is terminated, and whether FNMA will continue to exist
following conservatorship. FHLMC faces similar uncertainty about its future. If FNMA and FHLMC are taken out of conservatorship, it is unclear how the capital structure of FNMA and FHLMC would be
constructed and what effects, if any, there may be on FNMA’s and FHLMC’s creditworthiness and guarantees of certain mortgage-backed securities. It is also unclear whether the U.S. Treasury would continue to enforce
its rights or perform its obligations related to senior preferred stock. Should FNMA’s and FHLMC’s conservatorship end, there could be an adverse impact on the value of their securities, which could cause Fund
losses.
Asset-backed securities are structured like mortgage-backed securities, but instead
of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor
vehicle installment sales contracts or installment loan contracts, leases of various types of real and personal
property, and receivables from credit card agreements and from sales of personal property. Regular payments
received on asset-backed securities include both interest and principal. Asset-backed securities typically
have no U.S. government backing. Additionally, the ability of an issuer of asset-backed securities
to enforce its security interest in the underlying assets may be limited.
If a Fund purchases a mortgage-backed or other asset-backed security at a premium,
the premium may be lost if there is a decline in the market value of the security whether resulting
from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest rates. Like mortgage-backed securities, the varied effects of fluctuating interest rates on asset-backed security values make it impossible to accurately predict the security’s return. In addition, while the trading market for short-term mortgages and asset-backed securities is ordinarily quite liquid, in times of financial stress the trading market
for these securities may become restricted.
CMBS and RMBS generally offer a higher rate of interest than government and government-related
mortgage-backed securities because there are no direct or indirect government or government
agency guarantees of payment. The risk of loss due to default on CMBS and RMBS is historically
higher because neither the U.S. government nor an agency or instrumentality have guaranteed them.
CMBS and RMBS whose underlying assets are neither U.S. government securities nor U.S. government
insured mortgages, to
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the extent that real properties securing such assets may be located in the same geographical
region, may also be subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect such region and, ultimately, the
ability of property owners to make payments of principal and interest on the underlying mortgages. Non-government
mortgage-backed securities are generally subject to greater price volatility than those issued, guaranteed
or sponsored by government entities because of the greater risk of default in adverse market conditions.
Where a guarantee is provided by a private guarantor, the Fund is subject to the credit risk of such guarantor,
especially when the guarantor doubles as the originator.
Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. A CMO is a type of mortgage-backed security that
creates separate classes with varying maturities and interest rates, called tranches. Similar to a
bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole
mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed
by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different fixed or floating
interest rate and stated maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of
the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first returned to investors holding
the shortest maturity class. Investors holding the longer maturity classes receive principal only after
the first class has been retired. An investor is partially guarded against a sooner than desired return of principal
because of the sequential payments.
In a typical CMO transaction, a corporation (issuer) issues multiple series (i.e.,
Series A, B, C and Z) of CMO bonds (Bonds). Proceeds of the Bond offering are used to purchase mortgages or
mortgage pass-through certificates (Collateral). The Collateral is pledged to a third party trustee as
security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the
Bonds in the following order: Series A, B, C and Z. The Series A, B, and C Bonds all bear current interest.
Interest on a Series Z Bond is accrued and added to principal and a like amount is paid as principal on the
Series A, B, or C Bond is currently being paid off. Only after the Series A, B, and C Bonds are paid in full
does the Series Z Bond begin to receive payment. With some CMOs, the issuer serves as a conduit to allow loan originators
(primarily builders or savings and loan associations) to borrow against their loan portfolios.
CMOs that are issued or guaranteed by the U.S. government or by any of its agencies
or instrumentalities will be considered U.S. government securities by the Funds, while other CMOs, even
if collateralized by U.S. government securities, will have the same status as other privately issued securities
for purposes of applying the Funds' diversification tests.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different
maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased
by FHLMC. Payments of principal and interest on the FHLMC CMOs are made semiannually. The amount of principal
payable on each semiannual payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied
to the mortgage collateral pool. All sinking fund payments in the FHLMC CMOs are allocated to the
retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on
the mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund obligation for any payment date are paid to the holders of the FHLMC CMOs as additional sinking fund payments. Because of the “pass-through” nature of all principal payments received on the collateral pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the FHLMC CMOs is actually repaid is likely
to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection
of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient
to meet the FHLMC CMO’s minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
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Classes of CMOs may also include interest only securities (IOs) and principal only
securities (POs). IOs and POs are stripped mortgage-backed securities representing interests in a pool of
mortgages the cash flow from which has been separated into interest and principal components. IOs receive
the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile
in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends
to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise
since this increases the rate at which the investment is returned and the yield to maturity on the PO.
When payments on mortgages underlying a PO are slow, the life of the PO is lengthened and the yield
to maturity is reduced.
CMOs are generally subject to the same risks as mortgage-backed securities. In addition,
CMOs may be subject to credit risk because the issuer or credit enhancer has defaulted on its
obligations and a Fund may not receive all or part of its principal. Obligations issued by U.S. government-related
entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith
and credit of the U.S. government. The performance of private label mortgage-backed securities, issued by
private institutions, is based on the financial health of those institutions. Although GNMA guarantees timely
payment of GNMA certificates even if homeowners delay or default, tracking the “pass-through” payments may, at times, be difficult.
Collateralized Debt Obligations (CDOs). A CDO is a security backed by a pool of bonds, loans and other debt obligations. CDOs are not limited to investing in one type of debt and
accordingly, a CDO may own corporate bonds, commercial loans, asset-backed securities, residential mortgage-backed
securities, commercial mortgage-backed securities, and emerging market debt. The CDO’s securities are typically divided into several classes, or bond tranches, that have differing levels of investment
grade or credit tolerances. Most CDO issues are structured in a way that enables the senior bond classes
and mezzanine classes to receive investment-grade credit ratings. Credit risk is shifted to the
most junior class of securities. If any defaults occur in the assets backing a CDO, the senior bond classes are first
in line to receive principal and interest payments, followed by the mezzanine classes and finally by the lowest
rated (or non-rated) class, which is known as the equity tranche. Similar in structure to a collateralized mortgage
obligation (described above) CDOs are unique in that they represent different types of debt and credit risk.
Collateralized Loan Obligations (CLOs). CLOs are debt instruments backed solely by a pool of other debt securities. The risks of an investment in a CLO depend largely on the type of
the collateral securities and the class of the CLO in which a Fund invests. Some CLOs have credit ratings, but are
typically issued in various classes with various priorities. Normally, CLOs are privately offered and
sold (that is, they are not registered under the securities laws) and may be characterized by a Fund as illiquid
investments; however, an active dealer market may exist for CLOs that qualify for Rule 144A transactions. In
addition to the normal interest rate, default and other risks of fixed income securities, CLOs carry additional
risks, including the possibility that distributions from collateral securities will not be adequate to
make interest or other payments, the quality of the collateral may decline in value or default a Fund may invest in
CLOs that are subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected
investment results.
Credit Linked Notes (CLNs). Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may invest in CLNs. A CLN is a security structured
and issued by an issuer, which may be a bank, broker or special purpose vehicle. If a CLN is issued by a special
purpose vehicle, the special purpose vehicle will typically be collateralized by AAA-rated securities,
but some CLNs are not collateralized. The performance and payment of principal and interest is tied to that
of a reference obligation which may be a particular security, basket of securities, credit default swap, basket
of credit default swaps, or index. The reference obligation may be denominated in foreign currencies. Risks of
CLNs include those risks associated with the underlying reference obligation including, but not limited to,
market risk, interest rate risk, credit risk, default risk and foreign currency risk. In the case of a CLN created
with credit default swaps, the structure will be “funded” such that the par amount of the security will represent the maximum loss that could be incurred on the investment and no leverage is introduced. An investor in a CLN
also bears counterparty risk or the risk that the issuer of the CLN will default or become bankrupt and not
make timely payments of principal and interest on the structured security. Should the issuer default or declare
bankruptcy, the CLN
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holder may not receive any compensation. In return for these risks, the CLN holder
receives a higher yield. As with most derivative instruments, valuation of a CLN may be difficult due to the complexity
of the security.
Event-Linked Bonds. Event-linked bonds, including “catastrophe” bonds and other insurance-linked securities, are fixed income securities for which the return of principal and payment
of interest is contingent on the non-occurrence of a specific trigger event, such as a hurricane, earthquake, or
other occurrence that leads to physical or economic loss. In some cases, the trigger event will not be deemed
to have occurred unless the event is of a certain magnitude (based on, for example, scientific readings)
or causes a certain measurable amount of loss to the issuer, a particular industry group or a reference
index. If the trigger event occurs prior to maturity, a Fund may lose all or a portion of its principal and additional
interest. A Fund may also invest in similar bonds where the Fund may lose all or a portion of its principal
and additional interest if the mortality rate in a geographic area exceeds a stated threshold prior to maturity
whether or not a particular catastrophic event has occurred. Event-linked bonds include the universe of insurance-linked
securities, including privately-placed event-linked securities including sidecards, collateralized
reinsurance and industry loss warranties. Some of these investments are illiquid but they are event-linked
in that they default as a result of an event or series of events.
Event-linked bonds may be issued by government agencies, insurance companies, reinsurers,
and financial institutions, among other issuers, or special purpose vehicles associated
with the foregoing. Often event-links bonds provide for extensions of maturity in order to process and audit
loss claims in those cases when a trigger event has occurred or is likely to have occurred. An extension of maturity
may increase a bond’s volatility.
Event-linked bonds may expose a Fund to certain other risks, including issuer default,
adverse regulatory or jurisdictional interpretations, liquidity risk and adverse tax consequences. Lack
of a liquid market may result in higher transaction costs and the possibility that a Fund may be forced to liquidate
positions when it would not be advantageous to do so. Event-linked bonds are typically rated by one or more
nationally recognized statistical rating organizations and a Fund will only invest in event-linked bonds
that meet the credit quality requirements for the Fund.
The issuers of the event-linked bonds in which a Fund will invest are generally treated
as PFICs for U.S. income tax purposes. For more information about PFICs, see “Passive Foreign Investment Companies.”
Bank Instruments. Bank instruments are unsecured interest bearing bank deposits. Bank instruments include, but are not limited to, certificates of deposit, time deposits, and banker’s acceptances from U.S. or foreign banks, as well as Eurodollar certificates of deposit (Eurodollar CDs) and
Eurodollar time deposits of foreign branches of domestic banks. Some certificates of deposit are negotiable interest-bearing
instruments with a specific maturity issued by banks and savings and loan institutions in exchange
for the deposit of funds, and can typically be traded in the secondary market prior to maturity. Other
certificates of deposit, like time deposits, are non-negotiable receipts issued by a bank in exchange for the deposit
of funds which earns a specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. A banker’s acceptance is a bill of exchange or time draft drawn on and accepted by a commercial bank.
An investment in Eurodollar CDs or Eurodollar time deposits may involve some of the
same risks that are described for Foreign Securities.
Commercial Instruments. Commercial instruments include commercial paper, master notes and other short-term corporate instruments, that are denominated in U.S. dollars or foreign
currencies.
Commercial instruments are a type of instrument issued by large banks and corporations
to raise money to meet their short-term debt obligations, and are only backed by the issuing bank or corporation’s promise to pay the face amount on the maturity date specified on the note. Commercial paper consists
of short-term promissory notes issued by corporations. Commercial paper may be traded in the secondary
market after its issuance. Master notes are demand notes that permit the investment of fluctuating
amounts of money at varying rates of interest pursuant to arrangements with issuers who meet certain credit
quality criteria. The interest rate on a master note may fluctuate based on changes in specified interest
rates or may be reset
29
periodically according to a prescribed formula or may be a set rate. Although there
is no secondary market in master demand notes, if such notes have a demand feature, the payee may demand payment
of the principal amount of the note upon relatively short notice. Master notes are generally illiquid
and therefore typically subject to the Funds' percentage limitations for investments in illiquid investments.
Commercial instruments may not be registered with the SEC.
Synthetic Municipal Instruments. Synthetic municipal instruments are instruments, the value of and return on which are derived from underlying securities. Synthetic municipal instruments
in which the Funds may invest include tender option bonds, and fixed or variable rate trust certificates.
These types of instruments involve the deposit into a trust or custodial account of one or more long-term
tax-exempt bonds or notes (Underlying Bonds), and the sale of certificates evidencing interests in the
trust or custodial account to investors such as the Funds. The trustee or custodian receives the long-term fixed
rate interest payments on the Underlying Bonds, and pays certificate holders fixed rates or short-term floating
or variable interest rates which are reset periodically. A “tender option bond” provides a certificate holder with the conditional right to sell its certificate to the sponsor or some designated third party at specified intervals
and receive the par value of the certificate plus accrued interest (a demand feature). A "fixed rate trust certificate"
evidences an interest in a trust entitling a certificate holder to fixed future interest and/or principal
payments on the Underlying Bonds. A “variable rate trust certificate” evidences an interest in a trust entitling the certificate holder to receive variable rate interest based on prevailing short-term interest rates and also typically
provides the certificate holder with the conditional demand feature (the right to tender its certificate at
par value plus accrued interest under certain conditions).
All synthetic municipal instruments must meet the minimum quality standards for the
Funds' investments and must present minimal credit risks. In selecting synthetic municipal instruments
for the Funds, Invesco considers the creditworthiness of the issuer of the Underlying Bond, the sponsor and
the party providing certificate holders with a conditional right to sell their certificates at stated
times and prices (a demand feature).
Typically, a certificate holder cannot exercise the demand feature until the occurrence
of certain conditions, such as where the issuer of the Underlying Bond defaults on interest payments.
Moreover, because synthetic municipal instruments involve a trust or custodial account and a
third party conditional demand feature, they involve complexities and potential risks that may not be present
where a municipal security is owned directly.
The tax-exempt character of the interest paid to certificate holders is based on the
assumption that the holders have an ownership interest in the Underlying Bonds; however, the IRS has not
issued a ruling addressing this issue. In the event the IRS issues an adverse ruling or successfully
litigates this issue, it is possible that the interest paid to the Funds on certain synthetic municipal instruments
would be deemed to be taxable. The Funds rely on opinions of special tax counsel on this ownership question
and opinions of bond counsel regarding the tax-exempt character of interest paid on the Underlying Bonds.
Municipal Securities. Municipal Securities are typically debt obligations of states, territories or possessions of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, the interest on which, in the opinion of bond counsel or other
counsel to the issuers of such securities, is, at the time of issuance, exempt from federal income tax. The issuers
of municipal securities obtain funds for various public purposes, including the construction of a wide range
of public facilities such as airports, highways, bridges, schools, hospitals, housing, mass transportation, streets
and water and sewer works. Other public purposes for which municipal securities may be issued include
refunding outstanding obligations, obtaining funds for general operating expenses and obtaining funds to
lend to other public institutions and facilities.
Certain types of municipal securities are issued to obtain funding for privately operated
facilities. The credit and quality of private activity debt securities are dependent on the private
facility or user, who is responsible for the interest payment and principal repayment.
30
The two major classifications of Municipal Securities are bonds and notes. Municipal
bonds are municipal debt obligations in which the issuer is obligated to repay the original (or “principal”) payment amount on a certain maturity date along with interest. A municipal bond’s maturity date (the date when the issuer of the bond repays the principal) may be years in the future. Short-term bonds mature in
one to three years, while long-term bonds usually do not mature for more than a decade. Notes are short-term
instruments which usually mature in less than two years. Most notes are general obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or receipt
of other revenues. Municipal notes also include tax, revenue notes and revenue and bond anticipation notes (discussed
more fully below) of short maturity, generally less than three years, which are issued to obtain temporary
funds for various public purposes.
Municipal debt securities may also be classified as general obligation or revenue
obligations (or "special delegation securities"). General obligation securities are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and interest.
Revenue debt obligations, such as revenue bonds and revenue notes, are usually payable
only from the revenues derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise tax or other specific revenue source but not from the general taxing
power. The principal and interest payments for industrial development bonds or pollution control bonds are
often the sole responsibility of the industrial user and therefore may not be backed by the taxing power of the
issuing municipality. The interest paid on such bonds may be exempt from federal income tax, although current
federal tax laws place substantial limitations on the purposes and size of such issues. Such obligations
are considered to be Municipal Securities provided that the interest paid thereon, in the opinion of bond
counsel, qualifies as exempt from federal income tax. However, interest on municipal securities may give
rise to a federal alternative minimum tax (AMT) liability and may have other collateral federal income tax consequences. There is a risk that some or all of the interest received by the Fund from tax-exempt municipal
securities might become taxable as a result of tax law changes or determinations of the IRS.
Another type of revenue obligations is pre-refunded bonds, which are typically issued
to refinance debt. In other words, pre-refunded bonds result from the advance refunding of bonds that are
not currently redeemable. The proceeds from the issue of the lower yield and/or longer maturing
pre-refunding bond will usually be used to purchase U.S. government obligations, such as U.S. Treasury securities,
which are held in an escrow account and used to pay interest and principal payments until the scheduled
call date of the original bond issue occurs. Like other fixed income securities, pre-refunded bonds
are subject to interest rate, market, credit, and reinvestment risks. However, because pre-refunded bonds are generally
collateralized with U.S. government obligations, such pre-refunded bonds have essentially the same risks
of default as a AAA-rated security. The Fund will treat such pre-refunded securities as investment-grade securities,
notwithstanding the fact that the issuer of such securities may have a lower rating
(such as a below-investment-grade rating) from one or more rating agencies.
Within these principal classifications of municipal securities, there are a variety
of types of municipal securities, including but not limited to, fixed and variable rate securities, variable
rate demand notes, municipal leases, custodial receipts, participation certificates, inverse floating
rate securities, and derivative municipal securities.
After purchase by a Fund, an issue of Municipal Securities may cease to be rated by
Moody's Investors Service, Inc. (Moody's) or S&P Global Ratings (S&P), or another nationally recognized statistical rating organization (NRSRO), or the rating of such a security may be reduced below the minimum
credit quality rating required for purchase by the Fund. Neither event would require a Fund to dispose
of the security. To the extent that the ratings applied by Moody’s, S&P or another NRSRO to Municipal Securities may change as a result of changes in these rating systems, a Fund will attempt to use comparable credit
quality ratings as standards for its investments in Municipal Securities.
The yields on Municipal Securities are dependent on a variety of factors, including
general economic and monetary conditions, money market factors, conditions of the Municipal Securities
market, size of a particular offering, and maturity and rating of the obligation. Because many Municipal Securities
are issued to finance
31
similar projects, especially those related to education, health care, transportation
and various utilities, conditions in those sectors and the financial condition of an individual municipal
issuer can affect the overall municipal market. The market values of the Municipal Securities held by a Fund will
be affected by changes in the yields available on similar securities. If yields increase following the purchase
of a Municipal Security, the market value of such Municipal Security will generally decrease. Conversely, if yields
decrease, the market value of a Municipal Security will generally increase. The ratings of S&P and Moody’s represent their opinions of the quality of the municipal securities they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality. Consequently, municipal
securities with the same maturity, coupon and rating may have different yields while municipal securities
of the same maturity and coupon with different ratings may have the same yield.
Certain of the municipal securities in which the Funds may invest represent relatively
recent innovations in the municipal securities markets and the markets for such securities may be less
developed than the market for conventional fixed rate municipal securities.
Under normal market conditions, longer-term municipal securities generally provide
a higher yield than shorter-term municipal securities. The Funds have no limitation as to the maturity
of municipal securities in which they may invest. The Adviser may adjust the average maturity of a Fund’s portfolio from time to time depending on its assessment of the relative yields available on securities of different
maturities and its expectations of future changes in interest rates.
The net asset value of a Fund will change with changes in the value of its portfolio
securities. With fixed income municipal securities, the net asset value of a Fund can be expected to change
as general levels of interest rates fluctuate. When interest rates decline, the value of a portfolio invested
in fixed income securities generally can be expected to rise. Conversely, when interest rates rise, the value
of a portfolio invested in fixed income securities generally can be expected to decline. The prices of longer
term municipal securities generally are more volatile with respect to changes in interest rates than the prices
of shorter term municipal securities. Volatility may be greater during periods of general economic uncertainty.
Municipal Securities, like other debt obligations, are subject to the credit risk
of nonpayment. The ability of issuers of municipal securities to make timely payments of interest and principal
may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated
and reallocated among federal, state and local governmental units. Such nonpayment would result in
a reduction of income to a Fund, and could result in a reduction in the value of the municipal securities experiencing
nonpayment and a potential decrease in the net asset value of the Fund. In addition, a Fund may incur
expenses to work out or restructure a distressed or defaulted security.
The Funds may invest in Municipal Securities with credit enhancements such as letters
of credit and municipal bond insurance. The Funds may invest in Municipal Securities that are insured
by financial insurance companies. Since a limited number of entities provide such insurance, a
Fund may invest more than 25% of its assets in securities insured by the same insurance company. If a Fund
invests in Municipal Securities backed by insurance companies and other financial institutions, changes
in the financial condition of these institutions could cause losses to the Fund and affect share price. Letters
of credit are issued by a third party, usually a bank, to enhance liquidity and ensure repayment of principal
and any accrued interest if the underlying Municipal Bond should default. These credit enhancements do not guarantee
payments or repayments on the Municipal Securities and a downgrade in the credit enhancer could
affect the value of the Municipal Security.
If the IRS determines that an issuer of a Municipal Security has not complied with
applicable tax requirements, interest from the security could be treated as taxable, which could
result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate the current federal income tax exemption on Municipal Securities or otherwise
adversely affect the current federal or state tax status of Municipal Securities. For example, 2017 legislation
commonly known as the Tax Cuts and Jobs Act repeals the exclusion from gross income for interest on
pre-refunded municipal securities effective for such bonds issued after December 31, 2017.
32
Taxable municipal securities are debt securities issued by or on behalf of states
and their political subdivisions, the District of Columbia, and possessions of the United States, the
interest on which is not exempt from federal income tax. Taxable investments include, for example, hedging
instruments, repurchase agreements, and many of the types of securities the Fund would buy for temporary defensive
purposes.
At times, in connection with the restructuring of a municipal bond issuer either outside
of bankruptcy court in a negotiated workout or in the context of bankruptcy proceedings, the Fund may
determine or be required to accept equity or taxable debt securities, or the underlying collateral (which may
include real estate or loans) from the issuer in exchange for all or a portion of the Fund’s holdings in the municipal security. Although the Adviser will attempt to sell those assets as soon as reasonably practicable in most
cases, depending upon, among other things, the Adviser’s valuation of the potential value of such assets in relation to the price that could be obtained by the Fund at any given time upon sale thereof, the Fund may determine
to hold such securities or assets in its portfolio for limited period of time in order to liquidate
the assets in a manner that maximizes their value to the Fund.
Municipal Securities also include, but are not limited to, the following securities:
●
Bond Anticipation Notes usually are general obligations of state and local governmental
issuers which are sold to obtain interim financing for projects that will eventually be funded
through the sale of long-term debt obligations or bonds.
●
Revenue Anticipation Debt Securities, including bonds, notes, and certificates, are
issued by governments or governmental bodies with the expectation that future revenues from
a designated source will be used to repay the securities. In general, they also constitute general
obligations of the issuer.
●
Tax Anticipation Notes are issued by state and local governments to finance the current
operations of such governments. Repayment is generally to be derived from specific future tax revenues.
●
Tax-Exempt Commercial Paper (Municipal Paper) is similar to taxable commercial paper,
except that tax-exempt commercial paper is issued by states, municipalities and their agencies.
●
Tax-Exempt Mandatory Paydown Securities (TEMPS) are fixed rate term bonds carrying
a short-term maturity, usually three to four years beyond the expected redemption. TEMPS are structured
as bullet repayments, with required optional redemptions as entrance fees are collected.
●
Zero Coupon and Pay-in-Kind Securities do not immediately produce cash income. These
securities are issued at an original issue discount, with the full value, including accrued interest,
paid at maturity. Interest income may be reportable annually, even though no annual payments
are made. Market prices of zero coupon bonds tend to be more volatile than bonds that pay interest
regularly. Pay-in-kind securities are securities that have interest payable by delivery of additional
securities. Upon maturity, the holder is entitled to receive the aggregate par value of the securities.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and
less liquidity in the event of adverse market conditions than comparably rated securities paying cash
interest at regular interest payment periods. Prices on non-cash-paying instruments may be more
sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances than cash-paying securities with similar credit ratings, and thus may be
more speculative. Special tax considerations are associated with investing in certain lower-grade
securities, such as zero coupon or pay-in-kind securities.
●
Capital Appreciation Bonds are municipal securities in which the investment return
on the initial principal payment is reinvested at a compounded rate until the bond matures. The principal
and interest are due on maturity. Thus, like zero coupon securities, investors must wait
until maturity to receive interest and principal, which increases the interest rate and credit risks.
●
Payments in lieu of taxes (also known as PILOTs) are voluntary payments by, for instance
the U.S. government or nonprofits, to local governments that help offset losses in or otherwise
serve as a substitute for property taxes.
33
●
Converted Auction Rate Securities (CARS) are a structure that combines the debt service
deferral feature of Capital Appreciation Bonds (CABS) with Auction Rate Securities. The CARS
pay no debt service until a specific date, then they incrementally convert to conventional Auction
Rate Securities. At each conversion date the issuer has the ability to call and pay down any amount
of the CARS.
Some bonds may be “callable,” allowing the issuer to redeem them before their maturity date. To protect bondholders, callable bonds may be issued with provisions that prevent them
from being called for a period of time. Typically, that is 5 to 10 years from the issuance date. When interest
rates decline, if the call protection on a bond has expired, it is more likely that the issuer may call the bond.
If that occurs, the Fund might have to reinvest the proceeds of the called bond in investments that pay a lower
rate of return, which could reduce the Fund’s yield.
Inverse Floating Rate Interests. Inverse floating rate interests (Inverse Floaters) are issued in connection with municipal tender option bond (TOB) financing transactions to generate
leverage for the Fund. Such instruments are created by a special purpose trust (a TOB Trust) that holds long-term
fixed rate bonds sold to it by the Fund (the underlying security), and issues two classes of beneficial
interests: short-term floating rate interests (Floaters), which are sold to other investors, and Inverse
Floaters, which are purchased by the Fund. The Floaters have first priority on the cash flow from the underlying
security held by the TOB Trust, have a tender option feature that allows holders to tender the Floaters back
to the TOB Trust for their par amount and accrued interest at specified intervals and bear interest at prevailing
short-term interest rates. Tendered Floaters are remarketed for sale to other investors for their par amount
and accrued interest by a remarketing agent to the TOB Trust and are ultimately supported by a liquidity facility
provided by a bank, upon which the TOB Trust can draw funds to pay such amount to holders of Tendered
Floaters that cannot be remarketed. The Fund, as holder of the Inverse Floaters, is paid the residual cash
flow from the underlying security. Accordingly, the Inverse Floaters provide the Fund with leveraged exposure
to the underlying security. When short-term interest rates rise or fall, the interest payable on the
Floaters issued by a TOB Trust will, respectively, rise or fall, leaving less or more, respectively, residual interest
cash flow from the underlying security available for payment on the Inverse Floaters. Thus, as short-term interest
rates rise, Inverse Floaters produce less income for the Fund, and as short-term interest rates decline, Inverse
Floaters produce more income for the Fund. The price of Inverse Floaters is expected to decline when interest
rates rise and increase when interest rates decline, in either case generally more so than the price
of a bond with a similar maturity, because of the effect of leverage. As a result, the price of Inverse Floaters
is typically more volatile than the price of bonds with similar maturities, especially if the relevant TOB Trust
is structured to provide the holder of the Inverse Floaters relatively greater leveraged exposure to the underlying
security (e.g., if the par amount of the Floaters, as a percentage of the par amount of the underlying security,
is relatively greater). Upon the occurrence of certain adverse events (including a credit ratings downgrade
of the underlying security or a substantial decrease in the market value of the underlying security),
a TOB Trust may be collapsed by the remarketing agent or liquidity provider and the underlying security
liquidated, and the Fund could lose the entire amount of its investment in the Inverse Floater and may, in
some cases, be contractually required to pay the shortfall, if any, between the liquidation value of the underlying
security and the principal amount of the Floaters. Consequently, in a rising interest rate environment, the Fund’s investments in Inverse Floaters could negatively impact the Fund’s performance and yield, especially when those Inverse Floaters provide the Fund with relatively greater leveraged exposure to the underlying securities
held by the relevant TOB Trusts.
Final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Volcker Rule) prohibit banking entities and their affiliates from sponsoring
and/or providing certain services to TOB Trusts, which constitute “covered funds” under the Volcker Rule. As a result of the Volcker Rule, the Fund, as holder of Inverse Floaters, is required to perform certain duties
in connection with TOB financing transactions previously performed by banking entities. These duties may
alternatively be performed by a non-bank third-party service provider. A Fund’s expanded role in TOB financing transactions as a result of the Volcker Rule may increase its operational and regulatory risk.
Further, the SEC and various banking agencies have adopted rules implementing credit
risk retention requirements for asset-backed securities (the Risk Retention Rules), which apply to
TOB financing
34
transactions and TOB Trusts. The Risk Retention Rules require the sponsor of a TOB
Trust, which is deemed to be the Fund (as holder of the related Inverse Floaters), to retain at least 5%
of the credit risk of the underlying security held by the TOB Trust. As applicable, the Fund has adopted policies
and procedures intended to comply with the Risk Retention Rules. The Risk Retention Rules may adversely affect the Fund’s ability to engage in TOB financing transactions or increase the costs of such transactions
in certain circumstances.
There can be no assurances that TOB financing transactions will continue to be a viable
or cost-effective form of leverage. The unavailability of TOB financing transactions or an increase
in the cost of financing provided by TOB transactions may adversely affect the Fund’s net asset value, distribution rate and ability to achieve its investment objective.
Municipal Lease Obligations. Municipal lease obligations are issued by state and local governments or authorities to finance the acquisition of land, equipment and facilities, such as
state and municipal vehicles, telecommunications and computer equipment, and other capital assets. Municipal lease
obligations, which are a type of Municipal Security, may take the form of a lease, an installment purchase
contract or a conditional sales contract. Interest payments on qualifying municipal lease obligations are generally
exempt from federal income taxes.
Municipal lease obligations are generally subject to greater risks than general obligation
or revenue bonds. State laws set forth requirements that states or municipalities must meet in
order to issue municipal obligations, and such obligations may contain a covenant by the issuer to budget for,
appropriate, and make payments due under the obligation. However, certain municipal lease obligations may
contain "non-appropriation" clauses which provide that the issuer is not obligated to make payments on the obligation
in future years unless funds have been appropriated for this purpose each year. If not
enough money is appropriated to make the lease payments, the leased property may be repossessed as
security for holders of the municipal lease obligation. In such an event, there is no assurance that the property's
private sector or re-leasing value will be enough to make all outstanding payments on the municipal
lease obligation or that the payments will continue to be tax-free. Additionally, it may be difficult to dispose
of the underlying capital asset in the event of non-appropriation or other default. Direct investments by the Fund
in municipal lease obligations may be deemed illiquid and therefore subject to the Funds' percentage
limitations for illiquid investments and the risks of holding illiquid investments.
Municipal Forward Contracts. A municipal forward contract is an agreement by a Fund to purchase a Municipal Security on a when-issued basis with a longer-than-standard settlement period,
in some cases with the settlement date taking place up to five years from the date of purchase. Municipal
forward contracts typically carry a substantial yield premium to compensate the buyer for the risks
associated with a long when-issued period, including shifts in market interest rates that could materially impact the
principal value of the bond, deterioration in the credit quality of the issuer, loss of alternative investment
options during the when-issued period and failure of the issuer to complete various steps required to issue the
bonds.
Municipal Market Data Rate Locks. A Municipal Market Data Rate Lock (MMD Rate Lock) permits a Fund to lock in a specified municipal interest rate for a portion of its portfolio
to preserve a return on a particular investment or a portion of its portfolio as a duration management technique
or to protect against any increase in the price of securities to be purchased at a later date. MMD Rate Locks
may be used for hedging purposes. An MMD Rate Lock is an agreement between two parties, a Fund and an MMD
Rate Lock provider, pursuant to which the parties agree to make payments to each other on a notional amount,
contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a
specified level on the expiration date of the contract.
MMD Rate Locks involve the risk that municipal yields will move in the direction opposite
than the direction anticipated by a Fund. The risk of loss with respect to MMD Rate Locks is
limited to the amount of payments a Fund is contractually obligated to make. If the other party to an MMD Rate
Lock defaults, a Fund's risk of loss consists of the amount of payments that the Fund contractually
is entitled to receive. If there is a default by the counterparty, a Fund may have contractual remedies pursuant
to the agreements related to the transaction, but they could be difficult to enforce.
35
Investment Grade Debt Obligations. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations and U.S. commercial banks, U.S. dollar-denominated
obligations of foreign issuers or debt obligations of foreign issuers denominated in foreign currencies.
The Adviser considers investment grade securities to include: (i) securities rated
BBB- or higher by S&P or Baa3 or higher by Moody’s or an equivalent rating by another NRSRO, (ii) short-term securities with comparable NRSRO ratings, or (iii) unrated securities determined by the Adviser to
be of comparable quality, each at the time of purchase. The Adviser may rely to some extent on credit ratings by NRSROs in evaluating the credit risk of securities selected for the Fund’s portfolio. Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do
not reflect any judgment of market risk. Ratings and market value may change from time to time, positively
or negatively, to reflect new developments regarding the issuer. Rating organizations might not change their credit
rating of an issuer in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. The Fund’s Adviser internally assigns ratings to unrated securities, after assessing their credit quality and other factors, in investment-grade or below-investment-grade categories similar to
those of NRSROs. There can be no assurance, nor is it intended, that the Fund’s Adviser’s credit analysis process is consistent or comparable with the credit analysis process used by a NRSRO. The descriptions of debt securities ratings are found in Appendix A.
In choosing corporate debt securities on behalf of a Fund, portfolio managers may
consider:
i.
general economic and financial conditions;
ii.
the specific issuer’s (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions,
(e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic
or social conditions applicable to such issuer’s country; and,
iii.
other considerations deemed appropriate.
Debt securities are subject to a variety of risks, such as interest rate risk, income
risk, prepayment risk, inflation risk, credit risk, currency risk and default risk.
Non-Investment Grade Debt Obligations (Junk Bonds). Bonds rated below or determined to be below investment grade (as defined above in “Investment Grade Debt Obligations”) are commonly referred to as “junk bonds.” Analysis of the creditworthiness of junk bond issuers is more complex than that of investment-grade issuers and the success of the Adviser in managing these decisions is more dependent upon its own credit analysis than is the case with investment-grade bonds. Descriptions of debt
securities ratings are found in Appendix A.
The capacity of junk bonds to pay interest and repay principal is considered speculative.
While junk bonds may provide an opportunity for greater income and gains, they are subject to greater
risks than higher-rated debt securities. The prices of and yields on junk bonds may fluctuate to a greater
extent than those of higher-rated debt securities. Junk bonds are generally more sensitive to individual issuer developments,
economic conditions and regulatory changes than higher-rated bonds. Issuers of junk bonds are
often smaller, less-seasoned companies or companies that are highly leveraged with more traditional methods of
financing unavailable to them. Junk bonds are generally at a higher risk of default because
such issues are often unsecured or otherwise subordinated to claims of the issuer’s other creditors. If a junk bond issuer defaults, a Fund may incur additional expenses to seek recovery. The secondary markets in which
junk bonds are traded may be thin and less liquid than the market for higher-rated debt securities and a
Fund may have difficulty selling certain junk bonds at the desired time and price. Less liquidity in secondary
trading markets could adversely affect the price at which a Fund could sell a particular junk bond, and
could cause large fluctuations in the net asset value of that Fund’s shares. The lack of a liquid secondary market may also make it more difficult for a Fund to obtain accurate market quotations in valuing junk bond assets
and elements of judgment may play a greater role in the valuation.
36
Distressed Debt Securities. Distressed debt securities are securities that are the subject of bankruptcy proceedings or otherwise in default or in risk of being in default as to the repayment
of principal and/or interest at the time of acquisition by a Fund or that are rated in the lower rating
categories by one or more nationally recognized statistical rating organizations (for example, Ca or lower by Moody’s and CC or lower by S&P or Fitch) or, if unrated, are in the judgment of the Adviser or Sub-Adviser of
equivalent quality (“Distressed Securities”). Investment in Distressed Securities is speculative and involves significant risks. Each Fund will generally make such investments only when the Adviser or Sub-Adviser
believes it is reasonably likely that the issuer of the Distressed Securities will make an exchange
offer or will be the subject of a plan of reorganization pursuant to which a Fund will receive new securities in
return for the Distressed Securities. However, there can be no assurance that such an exchange offer will be
made or that such a plan of reorganization will be adopted. Additionally, a significant period of time may
pass between the time at which a Fund makes its investment in Distressed Securities and the time that any such exchange
offer or plan of reorganization is completed, if at all. During this period, it is unlikely that a
Fund would receive any interest payments on the Distressed Securities, a Fund will be subject to significant uncertainty
as to whether or not the exchange offer or plan of reorganization will be completed and a Fund may be required
to bear certain extraordinary expenses to protect and recover its investment. Therefore, a Fund’s ability to achieve current income for its shareholders may be diminished. Each Fund also will be subject to significant
uncertainty as to when and in what manner and for what value the obligations evidenced by the distressed
securities will eventually be satisfied (e.g., through a liquidation of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed securities or a payment of some amount in
satisfaction of the obligation). Even if an exchange offer is made or plan of reorganization is adopted
with respect to Distressed Securities held by a Fund, there can be no assurance that the securities or other
assets received by the Fund in connection with such exchange offer or plan of reorganization will not have a lower
value or income potential than may have been anticipated when the investment was made or no value.
Moreover, any securities received by a Fund upon completion of an exchange offer or plan of reorganization
may be restricted as to resale. Similarly, if a Fund participates in negotiations with respect
to any exchange offer or plan of reorganization with respect to an issuer of Distressed Securities, a Fund
may be restricted from disposing of such securities. To the extent that a Fund becomes involved in such proceedings,
the Fund may have a more active participation in the affairs of the issuer than that assumed generally
by an investor. Each Fund, however, will not make investments for the purpose of exercising day-to-day
management of any issuer’s affairs.
Structured Notes and Indexed Securities. Each Fund, except for Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, may invest in structured notes or
other indexed securities. Structured notes are derivative debt instruments, the interest rate or
principal of which is linked to currencies, interest rates, commodities, indices or other financial indicators (reference
instruments). Indexed securities may include structured notes and other securities wherein the interest
rate or principal is determined by a reference instrument.
Most structured notes and indexed securities are fixed income securities that have
maturities of three years or less. The interest rate or the principal amount payable at maturity of an
indexed security may vary based on changes in one or more specified reference instruments, such as a floating
interest rate compared with a fixed interest rate. The reference instrument need not be related to the terms
of the indexed security. Structured notes and indexed securities may be positively or negatively indexed (i.e.,
their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates),
and may have return characteristics similar to direct investments in the underlying reference instrument
or to one or more options on the underlying reference instrument.
Structured notes and indexed securities may entail a greater degree of market risk
than other types of debt securities because the investor bears the risk of the reference instrument. Structured
notes or indexed securities also may be more volatile, less liquid, and more difficult to accurately
price than less complex securities and instruments or more traditional debt securities. In addition to the
credit risk of the structured note or indexed security’s issuer and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease
as a result of changes in
37
the value of the underlying reference instruments. Further, in the case of certain
structured notes or indexed securities in which the interest rate, or exchange rate in the case of currency, is
linked to a reference instrument, the rate may be increased or decreased or the terms may provide that,
under certain circumstances, the principal amount payable on maturity may be reduced to zero resulting
in a loss to the Fund.
U.S. Corporate Debt Obligations. Corporate debt obligations are debt obligations issued or guaranteed by corporations that are denominated in U.S. dollars. Such investments may include,
among others, commercial paper, bonds, notes, debentures, variable rate demand notes, master notes,
funding agreements and other short-term corporate instruments. Commercial paper consists of short-term
promissory notes issued by corporations. Commercial paper may be traded in the secondary market after its
issuance. Variable rate demand notes are securities with a variable interest which is readjusted on pre-established
dates. Variable rate demand notes are subject to payment of principal and accrued interest (usually
within seven days) on a Fund’s demand. Master notes are negotiated notes that permit the investment of fluctuating amounts of money at varying rates of interest pursuant to arrangements with issuers who meet
the credit quality criteria of the Fund. The interest rate on a master note may fluctuate based upon changes in specified
interest rates or be reset periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand feature, the payee may demand
payment of the principal amount of the note upon relatively short notice. Funding agreements are
agreements between an insurance company and a Fund covering underlying demand notes. Although there is no
secondary market in funding agreements, if the underlying notes have a demand feature, the payee may demand
payment of the principal amount of the note upon relatively short notice. Master notes and funding
agreements are generally illiquid and therefore subject to the Funds' percentage limitation for illiquid investments.
Duration and Maturity of the Fund’s Portfolio. Duration is a measure of the expected life of a security on a current-value basis expressed in years, using calculations that consider the security’s yield, coupon interest payments, final maturity and call features.
While a debt security’s maturity can be used to measure the sensitivity of the security’s price to changes in interest rates, the term to maturity of a security does not take into account the
pattern (or expected pattern) of the security’s payments of interest or principal prior to maturity. Duration, on the other hand, measures the length of the time interval from the present to the time when the interest and principal
payments are scheduled to be received (or, in the case of a mortgage-related security, when the
interest and principal payments are expected to be received). Duration calculations weigh the present value
of each such payment by the time in years until such payment is expected to be received. If the interest
payments on a debt security occur prior to the repayment of principal, the duration of the security is less than
its stated maturity. For zero-coupon securities, duration and term to maturity are equal. Absent other factors, the lower
the stated or coupon rate of interest on a debt security or the longer the maturity or the lower
the yield-to-maturity of the debt security, the longer the duration of the security. Conversely, the higher the
stated or coupon rate of interest, the shorter the maturity or the higher the yield-to-maturity of a debt security,
the shorter the duration of the security.
Futures, options and options on futures in general have durations that are closely
related to the duration of the securities that underlie them. Holding long futures positions or call option
positions (backed by liquid assets) will tend to lengthen the portfolio’s duration.
In some cases the standard effective duration calculation does not properly reflect
the interest rate exposure of a security. For example, floating and variable rate securities often have
final maturities of ten or more years. However, their exposure to interest rate changes corresponds to the frequency
of the times at which their interest coupon rate is reset. In the case of mortgage pass-through securities,
the stated final maturity of the security is typically 30 years, but current rates of prepayments are
more important to determine the security’s interest rate exposure. In these and other similar situations, the investment adviser will use other analytical techniques that consider the economic life of the security as well
as relevant macroeconomic factors (such as historical prepayment rates) in determining the Fund’s effective duration.
38
Rule 2a-7 Requirements (for Invesco Government Money Market Fund and Invesco U.S.
Government Money Portfolio).
As permitted by Rule 2a-7 under the 1940 Act, Invesco Government Money Market Fund
and Invesco U.S. Government Money Portfolio seek to maintain a stable price of $1.00 per share
by using the amortized cost method to value portfolio securities and rounding the share value to the nearest
cent. Rule 2a-7 imposes requirements as to the diversification of the Funds, quality of portfolio securities,
maturity of the Funds and of individual securities and liquidity of the Funds. The discussion of investments in
this SAI is qualified by Rule 2a-7 limitations with respect to Invesco Government Money Market Fund and Invesco
U.S. Government Money Portfolio. In July 2023, the SEC adopted amendments to the rules that govern
registered money market funds, such as the Funds. These amendments, among other changes: (i) modify
the existing liquidity fee framework for non-government money market funds; (ii) increase required weekly
liquid asset and daily liquid asset minimums; (iii) require institutional prime and institutional tax-exempt
money market funds to impose a mandatory liquidity fee when daily net redemptions exceed certain levels
unless the amount of the fee determined by the fund is less than 0.01% of the value of the shares redeemed,
effective October 2, 2024; and (iv) allow government money market funds and retail money market funds to engage
in certain practices in order to maintain a stable net asset value in a negative interest rate environment.
Such amendments could impact the Funds' operations, performance, yields and operating expenses.
As a “Government Money Market Fund” under Rule 2a-7, Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio (1) are permitted to use the amortized cost
method of valuation to seek to maintain a stable $1.00 share price, (2) must invest at least 99.5% of their
total assets in cash, government securities and/or repurchase agreements that are “collateralized fully” (i.e., backed by cash or government securities) and (3) are not subject to discretionary liquidity fees on
fund redemptions which might apply to other types of funds. (In conformance with Rule 2a-7, the Board has reserved
its ability to change this policy with respect to discretionary liquidity fees, but such change would only become
effective after shareholders were provided with specific advance notice of a change in the Fund’s policy and have the opportunity to redeem their shares in accordance with Rule 2a-7 before the policy
change became effective.) Investments in other government money market funds may be included in the 99.5% policy
described above for Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio.
Diversification. In summary, Rule 2a-7 requires that a money market fund may not invest in the securities
of any issuer if, as a result, more than 5% of the Fund’s total assets would be invested in that issuer; provided that, each Fund may invest up to 25% of its total assets in securities of a single
issuer for up to three business days after acquisition. Certain securities are not subject to this diversification
requirement. These include: government securities; certain repurchase agreements; and shares of certain money
market funds. Rule 2a-7 imposes a separate diversification test upon the acquisition of a guarantee or demand
feature. (A demand feature is, in summary, a right to sell a security at a price equal to its approximate
amortized cost plus accrued interest). Government security generally means any security issued or guaranteed as
to principal or interest by the U.S. government or certain of its agencies or instrumentalities; or any certificate
of deposit for any of the foregoing.
For purposes of these diversification requirements with respect to issuers of Municipal
Securities (defined under the caption Municipal Securities), each state (including the District of Columbia
and Puerto Rico), territory and possession of the United States (U.S.), each political subdivision,
agency, instrumentality, and authority thereof, and each multi-state agency of which a state is a member is a separate “issuer.” When the assets and revenues of an agency, authority, instrumentality, or other political subdivision
are separate from the government creating the subdivision and the security is backed only by assets
and revenues of the subdivision, such subdivision would be deemed to be the sole issuer. Similarly, in
the case of an industrial development bond or private activity bond, if such bond is backed only by the assets
and revenues of the non-governmental user, then such non-governmental user would be deemed to be the sole
issuer.
Quality. Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may
invest only in U.S. dollar denominated securities that are "Eligible Securities" at
the time of acquisition as defined in Rule 2a-7. Rule 2a-7 defines an Eligible Security, in summary, as a security
(i) with a remaining
39
maturity of 397 calendar days or less that the Funds’ investment adviser (subject to oversight and pursuant to guidelines established by the Board) determines present minimal credit risk to the
Fund, (ii) that is a government security, or (iii) issued by a registered investment company that is a
money market fund. The eligibility of a security with a guarantee may be determined based on whether the
guarantee is an Eligible Security.
The Funds will limit investments to those which are Eligible Securities as defined
by applicable regulations at the time of purchase.
Maturity. Under Rule 2a-7, Invesco Government Money Market and Invesco U.S. Government Money
Portfolio may invest only in securities having remaining maturities of 397 calendar
days or less. The Funds maintain a dollar-weighted average portfolio maturity of no more than 60 calendar
days, and a dollar-weighted average life to maturity as determined without exceptions regarding certain interest
rate adjustments under Rule 2a-7 of no more than 120 calendar days. The maturity of a security is determined
in compliance with Rule 2a-7, which for purposes of the dollar-weighted average portfolio maturity permits,
among other things, certain securities bearing adjustable interest rates to be deemed to have a maturity
shorter than their stated maturity.
Liquidity. The Funds will hold securities that are sufficiently liquid to meet reasonably foreseeable
shareholder redemptions in light of the Funds’ obligations under section 22(e) of the 1940 Act (which forbids the suspension of the right of redemption, or postponement of the date of payment
or satisfaction upon redemption for more than seven days after the tender of such security for redemption,
subject to specified exemptions) and any commitments the Funds have made to shareholders. In addition,
the Funds shall not acquire an illiquid security if, immediately after the acquisition, the Fund would
have invested more than 5% of its total assets in illiquid securities. A Fund may not acquire any security other
than a Daily Liquid Asset (cash, direct obligations of the U.S. government, and other securities that will mature or
are subject to a demand feature that is exercisable and payable within one business day and amounts receivable
and unconditionally due within one business day on pending sales of portfolio securities) if, immediately
after the acquisition, the Fund would have invested less than 25% of its total assets in Daily Liquid Assets.
The Funds shall not acquire any security other than a Weekly Liquid Asset (cash, direct obligations of the U.S.
government, government securities issued by a person controlled or supervised by and acting as an instrumentality
of the U.S. government pursuant to authority granted by the Congress that are issued at a discount
to the principal amount to be repaid at maturity and have a remaining maturity of 60 days or less,
securities that will mature or are subject to a demand feature that is exercisable and payable within 5 business
days and amounts receivable and unconditionally due within 5 business days on pending sales of portfolio
securities) if, immediately after the acquisition, the Fund would have invested less than 50% of its
total assets in Weekly Liquid Assets.
Cash Positions Risk. As government money market funds, a portion of Invesco Government Money Market Fund's assets and Invesco U.S. Government Money Portfolio's assets will likely
be held in cash, which may negatively affect their performance. Maintaining cash positions may also subject
those funds to additional risks, such as increased counterparty risk exposure to the custodian bank holding
the assets held in cash.
Loans, Loan Participations and Assignments.
How a Fund Invests in Loans. A Fund may invest in loans in one or more of three ways:
a Fund may invest directly in a loan by acting as an original lender; a Fund may invest directly
in a loan by purchasing a loan by an assignment from an agent or other lender; or a Fund may invest indirectly
in a loan by purchasing a participation interest in a loan from an agent or other lender. A Fund may also
gain exposure to loans indirectly using certain derivative instruments, which is discussed elsewhere in this
SAI.
●
Original
Lender. A Fund can invest in loans, generally “at par” (a price for the loan equal approximately to 100% of a
funded principal amount of the loan, minus any original issue discount) as an original lender. When a Fund is an original lender (including as one of a group of original lenders),
it is entitled to
40
receive
a return at the full interest rate for the loan. When a Fund is an original lender, it may participate in structuring the loan and have
a direct contractual relationship with the borrower, may enforce compliance by the borrower with the
terms of the loan agreement and may have rights with respect to any funds acquired by other
lenders through set-offs.
●
Assignments. A Fund may also purchase a loan by assignment. When a Fund purchases a loan by assignment, it typically succeeds to whatever rights and obligations the assigning
lender had under the loan agreement and becomes a “lender” under the loan agreement, entitled to the same rights (including, but not limited to, enforcement or set-off rights) that are available
to lenders generally. However, because assignments are arranged through private negotiations between potential
assignees and potential assignors, the rights and obligations acquired by a Fund as
the purchaser of an assignment may differ from, and be more limited than, those held by the assigning
lender. In addition, if the loan is foreclosed, a Fund could be part owner of any collateral
and could bear the costs and liabilities of owning and disposing of the collateral.
●
Participation
Interests. These investments represent an undivided, indirect interest in a loan obligation of a borrower. They are typically
purchased from banks or dealers that have made the loan or are members of the loan syndicate. The participation seller remains as lender
of record, and continues to face the borrower, the agent, and the other parties to the loan agreement, while a Fund generally acquires
beneficial ownership of the loan. When the Fund buys a participation interest, it assumes the credit risk of the borrower and the counterparty
risk of the lender selling the participation interest (and, in certain circumstances, such lender’s credit risk), and the terms
of the participation may not entitle the Fund to all rights of a direct lender under the loan (for example, with respect to consent,
voting or enforcement rights). Therefore, the Fund’s rights under a participation interest for a particular loan may be more limited
than the rights of the original lender or an investor who acquires an assignment of that loan.
Floating Rate Corporate Loans and Corporate Debt Securities. Floating rate loans consist generally of obligations of companies and other entities (collectively, borrowers) incurred
for the purpose of reorganizing the assets and liabilities of a borrower; acquiring another company; taking over control
of a company (leveraged buyout); temporary refinancing; or financing internal growth or other general
business purposes. Floating rate loans are often obligations of borrowers who have incurred a significant
percentage of debt compared to equity issued and thus are highly leveraged.
41
Floating rate loans may include both term loans, which are generally fully funded at the time of a Fund’s investment, and revolving loans, which may require a Fund to make additional investments
in the loans as required under the terms of the loan agreement. A revolving credit loan agreement
may require a Fund to increase its investment in a loan at a time when a Fund might not otherwise have done
so, even if the borrower’s condition makes it unlikely that the loan will be repaid.
A floating rate loan is generally offered as part of a lending syndicate to banks
and other financial institutions and is administered in accordance with the terms of the loan agreement
by an agent bank who is responsible for collection of principal and interest and fee payments from the borrower
and apportioning those payments to all lenders who are parties to the agreement. Typically, the agent is
given broad discretion to enforce the loan agreement and is compensated by the borrower for its services.
Floating rate loans may be acquired by direct investment as a lender at the inception
of the loan or by assignment of a portion of a floating rate loan previously made to a different lender
or by purchase of a participation interest. If a Fund makes a direct investment in a loan as one of the
lenders, it generally acquires the loan at par. This means a Fund receives a return at the full interest rate for
the loan. If a Fund acquires its interest in loans in the secondary market or acquires a participation interest, the
loans may be purchased or sold above, at, or below par, which can result in a yield that is below, equal to,
or above the stated interest rate of the loan. At times, a Fund may be able to invest in floating rate loans only
through assignments or participations.
Historically, floating rate loans have not been registered with the SEC or any state
securities commission or listed on any securities exchange. As a result, the amount of public information
available about a specific floating rate loan has been historically less extensive than if the floating rate
loan were registered or exchange traded.
Floating rate debt securities are typically in the form of notes or bonds issued in
public or private placements in the securities markets. Floating rate debt securities will typically
have substantially similar terms to floating rate loans, but will not be in the form of participations or assignments.
The
floating rate loans and debt securities in which a Fund invests will, in most instances, be secured and senior
to other indebtedness of the borrower. Each floating rate loan and debt security will generally be secured by collateral. The value of collateral may decline
after a Fund’s investment, and collateral may be difficult to sell in the event of default. Consequently, the Fund may not receive
all the payments to which it is entitled. A Fund’s assets may be invested in unsecured floating rate loans and debt securities
or subordinated floating rate loans and debt securities, which may or may not be secured. If the borrower defaults on an unsecured loan
or security, there is no specific collateral on which the lender can foreclose. If the borrower defaults on a subordinated loan or security,
the collateral may not be sufficient to cover both the senior and subordinated loans and securities.
Most borrowers pay their debts from cash flow generated by their businesses. If a borrower’s cash flow is insufficient to pay its debts, it may attempt to restructure its debts rather than
sell collateral. Borrowers may try to restructure their debts by filing for protection under the federal bankruptcy laws
or negotiating a work-out. If a borrower becomes involved in a bankruptcy proceeding, access to collateral may be
limited by bankruptcy and other laws. If a court decides that access to collateral is limited or voidable,
a Fund may not recover the full amount of principal and interest that is due.
42
The degree to which borrowers
prepay floating rate loans and debt securities, whether as a contractual requirement or at the borrower’s election, may be affected by general business conditions, the borrower’s financial condition and competitive conditions among lenders. Prepayments cannot be predicted with accuracy. Prepayments may result in a Fund’s investing in floating rate loans and debt securities with lower yields.
Public Bank Loans. Public bank loans are privately negotiated loans for which information about the
issuer has been made publicly available. Public loans are made by banks or other financial
institutions, and may be rated investment grade (as defined in “Investment Grade Debt Obligations”) or below investment grade. However, public bank loans are not registered under the 1933 Act and are not
publicly traded. They usually are second lien loans normally lower in priority of payment to senior loans,
but have seniority in a company’s capital structure to other claims, such as subordinated corporate bonds or publicly-issued equity so that in the event of bankruptcy or liquidation, the company is required to pay
down these second lien loans prior to such other lower-ranked claims on their assets. Bank loans normally pay floating
rates that reset frequently.
Bank
loans generally are negotiated between a borrower and several financial institutional lenders represented
by one or more lenders acting as agent of all the lenders. The agent is responsible for negotiating the loan agreement that establishes
the terms and conditions of the loan and the rights of the borrower and the lenders, monitoring any collateral, and collecting principal
and interest on the loan. By investing in a loan, a Fund becomes a member of a syndicate of lenders.
Bank loans are subject to the risk of default. Default in the payment of interest
or principal on a loan will result in a reduction of income to a Fund, a reduction in the value of the loan, and
a potential decrease in the Fund’s net asset value. The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Bank loans are subject to the risk that the cash flow
of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments.
As discussed above, however, because bank loans reside higher in the capital structure than high yield
bonds, default losses have been historically lower in the bank loan market.
Senior Loans and Other Loans. A Fund may invest in loans, and in particular, in floating rate loans (sometimes referred to as “adjustable” rate loans) that hold (or in the judgment of the Adviser, hold) a senior position in the capital structure of U.S. and foreign corporations, partnerships or
other business entities that, under normal circumstances, allow them to have priority of claim ahead of (or at least
as high as) other obligations of a borrower in the event of liquidation. These investments are referred to as “Senior Loans” in this SAI.
Senior Loans typically have higher recoveries than other debt obligations that rank
lower in the priority of payments for a particular debtor, because in most instances they take preference over
those subordinated debt obligations, with respect to payment of interest and principal, and over stock.
However, the Fund is still subject to the risk that the borrower under a loan will default on scheduled interest
or principal payments and that the assets of the borrower to which the Fund has recourse will be insufficient
to satisfy in full the payment obligations that the borrower has to the Fund. The risk of default will increase in
the event of an economic downturn or, in the case of a floating rate loan, a substantial increase in interest
rates (because the cost of the borrower’s debt service will increase as the interest rate on its loan is upwardly adjusted). The Fund may own a debt obligation of a borrower that becomes, or is about to become, insolvent. The
Fund can also purchase
43
debt obligations that are extended to a bankrupt entity (so called debtor-in-possession or ‘DIP’ financing) or debt obligations that are issued in connection with a restructuring of the borrower
under bankruptcy laws.
Loans typically are arranged through private negotiations between a borrower and one
or more financial institutions (i.e., lenders). Usually the lenders are represented by an agent, which
usually is one of the lenders. The borrowers may use the proceeds of loans to finance leveraged buyouts,
recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings, or for other purposes.
Agents typically are commercial or investment banks that originate loans and invite other parties to join
the lending syndicate. In larger transactions, it is common to have several agents. However, only one agent
usually has primary responsibility for documentation and administration of the loan. Agents are normally
paid fees by the borrower for their services. While the Fund can serve as the agent or co-agent for a loan,
the Fund currently does not intend to act as an agent or co-agent. Agents, acting on behalf of the lenders, generally
are primarily responsible for negotiating the loan agreement, which establishes the terms and conditions
of the loan and the rights of the borrower and the lenders. The Fund will rely on agents to collect
payments of principal and interest on a loan. The Fund also will rely in part on agents to monitor compliance
by the borrower with the restrictive covenants in the loan agreement and to notify the Fund (or the lender
from whom the Fund has purchased a participation) of any adverse change in the borrower’s financial condition.
The Funds have no limits as to the maturity of other loans in which they invest or
as to the market capitalization range of the borrowers. The Funds can invest a variable amount of each
of their net assets in investments rated below “B.”
Investments in Pooled Investment Entities that Invest in Loans. A Fund can also buy interests in trusts and other pooled entities (including other investment companies) that invest
primarily or exclusively in loan obligations, including entities sponsored or advised by the Adviser or an affiliate.
The Fund will be subject to the pooled entity’s credit risks as well as the credit risks of the underlying loans. The loans underlying these investments may include loans to foreign or U.S. borrowers, may be collateralized
or uncollateralized and may be rated investment grade or below investment-grade or may be unrated. These investments
are subject to the risk of default by the borrower, interest rate and prepayment risk, as well as
credit risks of the pooled entity that holds the loan obligations.
Highly Leveraged Transactions and Insolvent Borrowers. A Fund can invest in loans made in connection with highly leveraged transactions. These transactions may include operating loans, leveraged buyout loans, leveraged capitalization loans and other types of acquisition financing.
Those loans are subject to greater credit risks than other loans. Highly leveraged loans and loans in default
also may be less liquid than other loans. Highly leveraged loans and loans in default also may be less liquid than other loans. If the Fund voluntarily or involuntarily sold those types of loans, it might not receive
the full value it expected.
A Fund can also invest in loans of borrowers that are experiencing, or are likely to
experience, financial difficulty. In addition, the Fund can invest in loans of borrowers that have filed
for bankruptcy protection or that have had involuntary bankruptcy petitions filed against them by creditors. Various
laws enacted for the protection of debtors may apply to loans. A bankruptcy proceeding against a borrower
could delay or limit the ability of the Fund to collect the principal and interest payments on that borrower’s loans. If a lawsuit is brought by creditors of a borrower under a loan, a court or a trustee in bankruptcy
could take certain actions that would be adverse to the Fund. For example:
●
Other creditors might convince the court to set aside a loan or the collateralization
of the loan as a “fraudulent conveyance” or “preferential transfer.” In that event, the court could recover from the Fund the interest and principal payments that the borrower made before becoming insolvent.
There can be no assurance that the Fund would be able to prevent that recapture.
●
A bankruptcy court may restructure the payment obligations under the loan so as to
reduce the amount to which the Fund would be entitled.
●
The court might discharge the amount of the loan that exceeds the value of the collateral
or assets to which the lenders have recourse.
44
●
The court could subordinate the Fund’s rights to the rights of other creditors of the borrower under applicable law.
Companies
involved in significant restructuring tend to be subject to increased litigation risk including for investors in these
companies, such
as the Funds.
Expenses of asserting or defending against, claims
in connection with such restructurings are generally directly or indirectly borne by the Funds. See also “Litigation
Risk” herein.
Delayed Draw Loans. There may be obligations under a loan agreement to make disbursements of loans after the initial disbursement in certain circumstances, for example if the loan was partially “unfunded” at the time the Funds invested or if there otherwise is an ongoing commitment from the lenders to disburse
further loans.
General risks associated with loans:
The use by the Funds of loans involves special considerations and risks, as described
below:
Fees. A Fund may be required to pay and may receive various fees and commissions in
connection with purchasing, selling and holding interests in loans. Borrowers typically pay three
kinds of fees to lenders: facility fees (which may be structured as original issue discount) when a loan is
originated; commitment fees on an ongoing basis based on the unused portion of a loan commitment; and prepayment
penalties when a borrower prepays a loan.
A Fund receives these fees directly from the borrower if the Fund is an original lender
or, in the case of commitment fees and prepayment penalties, if the Fund acquires an assignment. Whether
the Fund receives a facility fee in the case of an assignment or participation interest depends on negotiations
between the Fund and the lender selling the interests.
When a Fund buys an assignment or a participation, it may be required to pay a fee,
or cede a portion of the interest and fees that accrued prior to settlement of the assignment, to the lender
selling the assignment or the participant. Occasionally, the selling lender pays a fee to the assignee or
the participant. If the Fund assigns a loan or sells a participation, it may be required to pass along to a buyer
a portion of any interest and fees that the Fund would otherwise be entitled to. In addition, in the case of an
assignment, the Fund may be required to pay a transfer fee to the lending agent. If the Fund sells a participation
Interest, the Fund may be required to pay a transfer fee to the lender that holds the nominal interest in the
loan.
Delayed Settlement. Compared to securities and to certain other types of financial assets, purchases, and sales of loans, including via participation, take relatively longer to settle.
This is partly due to the nature of loans, which require a written assignment agreement and various ancillary documents
for each transfer, and frequently require discretionary consents from both the borrower and the administrative
agent. In addition, dealers frequently insist on matching their purchases and sales, which can lead to delays in the Fund’s settlement of a purchase or sale in circumstances where the dealer’s corresponding transaction with another party is delayed. Dealers will also sometimes sell loans short, and hold their trades
open for an indefinite period while waiting for a price movement or looking for inventory to purchase.
This extended settlement process can (i) increase the counterparty credit risk borne
by the Fund; (ii) leave the Fund unable to timely vote, or otherwise act with respect to, loans it has
agreed to purchase; (iii) delay the Fund from realizing the proceeds of a sale of a loan; (iv) inhibit the Fund’s ability to re-sell a loan that it has agreed to purchase if conditions change (leaving the Fund more exposed
to price fluctuations); (v) prevent the Fund from timely collecting principal and interest payments; and (vi)
expose the Fund to adverse tax or regulatory consequences.
The Loan Syndications and Trading Association (LSTA) has promulgated a “delay compensation” provision in its standard loan documentation that mitigates the direct risk of permanently
losing interest
45
payments as a result of delayed settlement by causing interest to begin to accrue for the buyer’s account after the seventh business day following the trade date (for distressed trades, the twentieth
business day). However, this does not mitigate the other risks of delayed settlement. In addition,
the mechanism itself can result in opportunistic behavior: A seller, having locked in its trade, might delay
closing for seven business days in order to maximize its interest collections, even if it could have closed earlier,
while a buyer may no longer feel any pressure to close at all, since interest is accruing for its benefit,
and may choose to use its cash elsewhere. The LSTA has further attempted to put an outer limit on long, unjustified
settlement delays by promulgating “buy-in/sell-out” provisions that allow a party to enter into a “cover” trade if the other party refuses to close. However, these provisions are complicated, time-consuming, and little-used,
and are in any event not triggered until the fifteenth business day after the trade date (for distressed
trades, the fiftieth business day). To the extent the extended loan settlement process gives rise to short-term liquidity
needs, such as the need to satisfy redemption requests, the Fund may hold cash, sell investments
or temporarily borrow from banks or other lenders.
Interest
Rate Benchmarks for Floating Rate Loans. The loans in which
a Fund invests typically have floating or adjustable interest rates. For that reason, the Adviser expects that when interest rates change,
the values of these floating rate loans will fluctuate less than the values of fixed-rate debt securities, and that the net asset values
of the Fund’s shares will fluctuate less than the shares of funds that invest mainly in fixed- rate debt obligations. However,
the interest rates of some floating rate loans adjust only periodically. Between the times that interest rates on floating rate loans
adjust, the interest rates on those floating rate loans may not correlate to prevailing interest rates. That will affect the value of
the loans and may cause the net asset values of the Fund’s shares to fluctuate.
The applicable rate is defined in the loan agreement. Borrowers tend to select the
base lending rate that results in the lowest interest cost, and the benchmark selected by a borrower for
its loans may change from time to time (but the benchmark selected for a particular loan will remain the same
for the life of that loan). If the benchmark interest rate on a floating rate loan changes, the rate payable to lenders
under the floating rate loan will, in turn, change at the next scheduled adjustment date. If the benchmark
rate increases, the Fund would earn interest at a higher rate on that floating rate loan after the next scheduled
adjustment date. If the benchmark rate decreases, the Fund would earn interest at a lower rate on that floating
rate loan after the next scheduled adjustment date.
A Fund may use interest rate swap agreements and other hedging practices to mitigate
fluctuations in value when the interest rate under the loan is periodically reset. The Fund may invest
in loans having a fixed rate of interest; however, it is unlikely to do so because fixed rate loans are uncommon
in the loan market generally.
Interest rates on floating rate loans adjust periodically based on a benchmark rate
plus a premium or spread over the benchmark rate. The benchmark rate usually is the Prime Rate, the
Federal Reserve federal funds rate, SOFR (or, previously LIBOR) or other base lending rates used by commercial
lenders (each as defined in the applicable loan agreement).
●
The Prime Rate quoted by a major U.S. bank is generally the interest rate at which that bank is willing to lend U.S. dollars to its most creditworthy borrowers, although it may not be the bank’s lowest available rate.
●
The Federal Reserve federal funds rate is the rate that the Federal Reserve Bank charges
member banks for borrowing money.
●
The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate for dollar-denominated
loans that generally replaced the London Interbank Offered Rate (LIBOR) effective
July 1, 2023, and is calculated using data from overnight Treasury repurchase market activity (Treasuries
loaned or borrowed overnight). SOFR is published every business day by the U.S. Federal Reserve
Bank of New York. The interest rate on SOFR based loans may reset daily, monthly or quarterly,
or may be
46
computed for a monthly or quarterly period on the basis of an average of daily SOFR
observed over that monthly or quarterly period.
The interest rate on SOFR-based loans may reset daily, monthly or quarterly, or may be computed for a monthly or quarterly period on the basis of an average of daily SOFR observed over
that monthly or quarterly period. Quarterly interest periods are most common for floating rate loans in which the Fund
invests. Certain floating or variable rate loans may permit the borrower to select an interest rate
reset period of up to one year (although interest periods longer than six months will often require lender consent). Investing in loans with longer interest rate reset periods or fixed interest rates may increase fluctuations in the Fund’s net asset value as a result of changes in market interest rates: falling short-term floating interest rates tend to decrease the income payable to the Fund on its floating rate loan investments, and rising short-term floating interest rates tend to increase that income. However, the Fund may attempt to hedge its fixed rate loans against interest rate fluctuations by entering into interest rate swaps or total return swap transactions. Nevertheless, changes in interest rates can affect the value of the Fund’s floating rate loans, especially if rates change sharply in a short period, because the resets of the interest rates on the underlying portfolio of floating rate loans occur periodically and will not all happen simultaneously with changes in prevailing rates.
47
In addition, in market conditions where short term interest rates are particularly low, certain
floating rate loans may be issued with a feature that prevents the relevant benchmark rate from
adjusting below a specified minimum level. This is achieved by defining a “floor” to the benchmark rate, so that if downward market movements of the benchmark rate would, absent this feature, cause the benchmark rate to fall below the floor, with this feature, the benchmark rates of these floating rate loans become
fixed at the applicable minimum floor level until short term interest rates (and therefore the benchmark rate)
rise above that level. Although this feature is intended to result in these floating rate loans yielding
more than they otherwise would when short term interest rates are low, the feature might also result in the secondary market prices of these floating rate loans becoming more sensitive to changes in interest rates should short term interest rates rise.
Credit Quality Standards for Loans. Debt securities rated below “BBB-” by S&P or “Baa3” by Moody’s are commonly referred to as “high risk” securities or, in the case of bonds, “junk bonds.” Loans rated “B” are below investment grade and are regarded by rating organizations as predominantly speculative with respect to the borrower’s ability to repay interest and principal when due over a long period. A Fund may invest in loans that are rated both investment grade and below-investment grade by rating organizations. An appendix to the Fund’s Statement of Additional Information includes the definitions of the rating categories of the principal rating organizations. Many loans are not rated by rating organizations. The lack of a rating does not necessarily imply that a loan is of lesser investment quality.
Limited Public Information. While the Fund expects to have access to financial and other information regarding
the borrower that has been made available to the lenders under a loan, it may not have such information in connection with participation interests and certain loan assignments. Additionally, the amount of public information available with respect to loans generally will be less extensive than what is available for exchange-listed or otherwise registered securities.
Potential Material Non-Public Information. In certain cases, the Fund’s Adviser or Sub-Adviser may receive material, non-public information regarding loans, and its ability to trade in such loans for the account of the Fund
could potentially be limited by its possession of such information. Such limitations on the Fund’s Adviser or Sub-Adviser’s ability to trade could have an adverse effect on the Fund by, for example, preventing the Fund from
selling a loan that is experiencing a material decline in value. In some instances, these trading restrictions
could continue in effect for a substantial period of time.
Prepayment. Because of prepayments, the actual remaining
maturity of a loan may be considerably less than its stated maturity. Notwithstanding their stated maturity,
loans may be prepaid prior to their stated terms for reasons including, but not limited to, high market demand
for loans, refinancing by the borrower, mandatory prepayment requirements or desire of the borrower to repay outstanding
debt. If a borrower prepays a loan, the proceeds will have to be reinvested in other loans or
financial assets that may pay lower rates of return.
48
The reinvestment by the Fund of the proceeds of prepaid loans could result in a reduction
of income to the Fund in falling interest rate environments. Prepayment penalty fees that may be
assessed in some cases may help offset the loss of income to the Fund in those cases.
Subordination. Senior loans typically hold the most senior position in a borrower’s capital structure. They may include loans that hold the most senior position alone, loans that hold an equal
ranking with other senior debt, or loans that are, in the judgment of the Adviser, in the category of senior
debt of the borrower. Borrowers typically are required contractually to pay the holders of senior loans
before they pay the holders of subordinated debt and preferred or common shareholders and give the holders of senior
secured loans a claim on some or all of the borrower’s assets that is senior to that of subordinated debt, preferred stock and common stock of the borrower in the event that the borrower defaults or becomes bankrupt.
Lenders obtain priority liens that typically provide the first right to cash flows or proceeds from the sale of a borrower’s collateral, if any, if the borrower becomes insolvent. That right is subject to the
limitations of bankruptcy law, which may provide higher priority to certain other claims such as, for example, employee
salaries, employee pensions and taxes. Senior loans are subject to the risk that a court could subordinate
a senior loan to presently existing or future indebtedness or take other action detrimental to the
holders of senior loans.
That senior position in the borrower’s capital structure typically gives the holders of senior loans a claim on some or all of the borrower’s assets that is senior to that of subordinated debt, preferred stock and common stock of the borrower in the event that the borrower defaults or becomes bankrupt.
This means in the event the assets of the borrower are insufficient in value to satisfy all its creditors,
senior debt will be satisfied in priority to debt that is subordinate to senior debt.
Lien Position. Loans that are collateralized may have multiple lenders or other creditors that take
different lien positions. This means that if the borrower defaults on its obligations
under the loan and the loan creditors enforce their security interest or if the borrower becomes bankrupt, the
secured claims of the creditors in the first lien position will be satisfied prior to the secured claims
of the creditors in the second lien position. While second lien loan positions generally are subject to similar risks
as those associated with investments in first lien loan positions, second lien loan positions have the additional
risk that if the borrower defaults on its obligations under the loan and the loan creditors enforce their security
interest or if the borrower becomes bankrupt, the secured claims of the creditors in the first lien position
will be satisfied prior to the secured claims of the creditors in the second lien position. If the cash flow
and assets of the borrower are insufficient to satisfy both the first lien loans and the second lien loans in
full, the creditors in the second lien position may not be satisfied in full. Intercreditor arrangements that are often
present where a loan has first and second lien positions typically include ‘standstill’ provisions whereby the enforcement rights of second lien creditors are restricted in favor of the first lien creditors’ rights and give the first lien creditors the right to accept or reject any restructuring plans in the event of the default or insolvency
of the borrower. If a loan has first and second lien positions, typically the Fund will invest in the first lien
position; however, it may invest in the second lien position. Second lien positions generally pay a higher margin than
first lien positions to compensate second lien creditors for the greater risk they assume.
Collateral. Loans, like other debt obligations, are subject to the risk of the borrower’s non-payment of scheduled interest and/or principal. While certain of the Fund’s investments in loans may be secured by collateral that the Adviser or Sub-Adviser believes to be equal to or in excess of the
principal amount of the loan at the time of investment, there can be no assurance that the liquidation of such collateral,
if any, would satisfy the borrower’s obligations in the event of non-payment of scheduled interest or principal payments, or that the collateral could be readily liquidated. In the event of a borrower’s bankruptcy, the Fund could experience delays or limitations in its ability to realize the benefits of collateral securing
a loan.
For the loans in which the Fund invests that are secured by collateral, that collateral may include the borrower’s tangible assets, such as cash, accounts receivable, inventory, real estate, buildings, and equipment, common and/or preferred stock of subsidiaries, and intangible assets including trademarks, copyrights, patent rights and franchise value. The Fund may also receive guarantees
or other credit support
49
as a form of security. A loan agreement may or may not require the borrower to pledge additional collateral
to secure a loan if the value of the initial collateral declines, or if additional assets are acquired by the borrower. Collateral may consist of assets that may not be readily liquidated, and there is no assurance that the liquidation of those assets would satisfy in full a borrower’s obligations under a loan. A borrower’s subsidiaries, affiliates, shareholders, or owners may provide collateral in the form of secured guarantees and/or security interests in assets that they own. However, the value of the collateral may decline after the Fund invests in the loan, particularly if the collateral consists of equity securities
of the borrower or its subsidiaries or affiliates. If the collateral consists of stock of the borrower or its subsidiaries or affiliates, the stock may lose all of its value in the event of a bankruptcy, which would leave the Fund exposed to greater potential loss.
If a borrower defaults, insolvency laws may limit the Fund’s access to the collateral, or the lenders may be unable to liquidate the collateral. A bankruptcy court might find that the lenders’ security interest or their enforcement of their security under the loan to be invalid, or a bankruptcy court
may require the borrower to use the collateral to pay other outstanding obligations prior to satisfying the lenders
in full. If the collateral consists of stock of the borrower or its subsidiaries, the stock may lose all of its
value in the event of a bankruptcy, which would leave the Fund exposed to greater potential loss. In addition, in the event of a borrower default on a collateralized loan, the Fund may receive assets other than
cash or securities in full or partial satisfaction of the borrower’s obligation under the loan. Those assets may be illiquid, and the Fund might not be able to realize the benefit of the assets for legal, practical or other
reasons. The Fund might hold those assets until the Adviser determines it is appropriate to dispose of them. If
the collateral becomes illiquid or loses some or all of its value, the collateral may not be sufficient in value to
compensate the Fund in full in the event of a default of scheduled interest or principal payments.
The Fund can invest in loans that are not secured by any specific collateral of the borrower. If the borrower is unable to pay interest or defaults in the payment of principal, there will be no collateral on which the Fund can foreclose. Therefore, these loans present greater risks than collateralized loans because the recourse of the Fund to the borrower’s assets in the case of a default would be as a general unsecured creditor. The Fund applies the same investment and credit standards to unsecured loans as to secured loans, except for collateral requirements.
Generally, the agent for a particular loan is responsible for monitoring collateral and for exercising
remedies available to the lenders such as foreclosure upon collateral in the event
of the borrower’s default. In reliance upon the opinions of their legal counsel, agents generally are also responsible for determining that the Lenders have obtained a perfected security interest in the collateral securing loans, if any. However, the agent will usually only be liable for its gross negligence or willful misconduct, and not for ordinary negligence. In certain circumstances, the loan agreement may authorize the agent to liquidate the
collateral and to distribute the liquidation proceeds pro rata among the lenders. Financial difficulties of agents can also pose a risk to the Fund. If an agent for a particular loan becomes insolvent, the Fund could incur losses in connection with its investment in that loan. An agent could declare bankruptcy, and a regulatory authority could appoint a receiver or conservator. Should this occur, the assets that the agent holds under the loan agreement, if any, should continue to be available to the lenders, including the Fund. A regulator or a court, however, might determine that any such assets are subject to the claims of the agent’s general or secured creditors. If that occurs, the Fund might incur costs and delays in realizing final payment on a loan, or the Fund might suffer a loss of principal or interest. The Fund may be subject to similar risks when it buys a participation interest in
a loan. Most participations purchased by the Fund are structured to be “true sales” of the underlying loan, in which case the loan should not be included in the bankruptcy estate of the participation seller. However, a court might determine that the participation was not in fact a “true sale,” in which case the Fund would be a general unsecured creditor of the participation seller.
The Fund may also invest in loans that are not secured by collateral. Unsecured loans
involve additional risk because the lenders are general unsecured creditors of the borrower and any secured
creditors may have prior rights of recourse to the assets of the borrower, and the assets of the borrower
may be insufficient to satisfy in full all obligations owed to its creditors.
50
Borrower Covenants and Lender Rights. Loan agreements historically have had contractual terms designed to protect lenders, which often include restrictive covenants that limit
the activities of the borrower. A restrictive covenant is a promise by the borrower not to take certain actions that
might impair the rights of lenders. Those covenants typically require the scheduled payment of interest and principal
and may include restrictions on dividend payments and other distributions to the borrower’s shareholders, provisions requiring the borrower to maintain specific financial ratios or relationships and limits on the borrower’s total debt. In addition, a covenant may require the borrower to prepay the loan or debt obligation
with any excess cash flow, proceeds of asset sales or casualty insurance, or other available cash.
A breach of a covenant (after the expiration of any cure period) in a loan agreement that is not waived by
the agent and the lenders normally is an event of default, permitting acceleration of the loan. This means that
the agent has the right to demand immediate repayment in full of the outstanding loan. If a lender accelerates
the repayment of a loan because of the borrower’s violation of a restrictive covenant under the loan agreement, the borrower might default in payment of the loan. If a loan is not paid when due, or if upon acceleration
of a loan, the borrower fails to repay principal and accrued (but unpaid) interest in full, this failure may
result in a reduction in value of the loan (and possibly the Fund’s net asset value).
Lenders historically have had certain voting and consent rights under a loan agreement.
Action subject to a lender vote or consent generally requires the vote or consent of the holders of
some specified percentage of the outstanding principal amount of a loan. Certain decisions, such as reducing the
amount or increasing the time for payment of interest on or repayment of principal of a loan, or releasing
collateral for the loan, frequently requires the unanimous vote or consent of all lenders affected.
If the Fund is not a direct lender under the loan because it has invested via a participation,
derivative or other indirect means, the Fund may not be entitled to exercise some or all of the
lender rights described in this section.
Over time, the
customary terms of loans have evolved such that they are no longer accompanied by the various
restrictive covenants that historically accompanied most loans and that were in favor of the investor. Newly
originated loans (including
reissuances and restructured loans) in which a Fund may
invest have varied terms and conditions, but
generally contain few or no financial maintenance covenants (sometimes referred to as “covenant lite”).
Financial maintenance covenants are those that require a
borrower to maintain certain financial metrics during the life of
the loan, such
as maintaining certain
levels of cash flow or limiting leverage. In the event of
financial deterioration on the part
of the borrower, these
covenants are included to permit
the lenders
to renegotiate the terms of the loan, such as increasing the
borrowing costs to the borrower, or to take other
actions which would improve the position of the
lender. Accordingly, the
Fund may experience difficulty or delays in enforcing
its rights
on its
holdings of loans, which
may result in
losses to
the Fund, especially during a downturn
in the credit cycle. Although
loans may contain few or no financial maintenance
covenants, information
necessary to
monitor a borrower’s financial performance may be
available without covenants to lenders and the public alike
and can be used to detect such early warning signs as deterioration of
a borrower’s
financial condition or results. When
such information is available, the
Adviser will seek
to take appropriate action without the help of
covenants in the loans.
Limited Secondary Market for Loans. Due to restrictions on transfers
in loan agreements and the nature of the private syndication of loans, some loans are not as easily purchased or sold as publicly-traded
securities. If there is no active secondary market for a loan, it may be more difficult to sell the interests in such a loan at a price
that is acceptable or to even obtain pricing information. Further, some loans, loan participations and assignments may not be rated by
major rating agencies. As a result, some loans are illiquid, which means that the Fund may be limited in its ability to sell those loans
at an acceptable price when it wants to in order to generate cash, avoid losses or to meet repurchase requests. The market for illiquid
financial assets is more volatile than the market for liquid securities and it may be more difficult to obtain accurate valuations for
the Fund’s investments.
Possible Limited Legal Recourse. Investments in loans, loan participations and assignments present the possibility that a Fund could be
held liable as a co-lender under emerging legal theories of lender liability. In certain circumstances, loans may not be deemed to be
securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have the protection of anti-fraud
provisions of the federal securities laws, as would be the case for bonds or stocks. Instead, in such cases, lenders generally rely on
the contractual provisions in the loan agreement itself, and common-law fraud protections under applicable state law.
51
Possible Limited Availability of Loans. Direct investments in loans and, to a lesser degree, investments in participation interests in or assignments of loans may be limited. The limited
availability may be due to a number of factors. Direct lenders may allocate only a small number of loans to new
investors, including the Fund. There may be fewer loans available for investment that meet the Fund’s credit standards, particularly in times of economic downturns. Also, lenders or agents may have an incentive to market
the less desirable loans to investors such as the Fund while retaining attractive loans for themselves.
This would reduce the amount of attractive investments for the Fund. If market demand for loans increases,
the interest paid by loans that the Fund holds may decrease.
Credit and Counterparty Risk Associated with Participation Interests. Participation interests are primarily dependent upon the creditworthiness of the borrower, which is obligated to make payments of principal and interest on the loan. In buying a participation interest, however, a Fund assumes both the credit risk of the borrower and the counterparty risk of the lender selling the participation
interest. As with an assignment or a loan originated by a Fund, there is a risk that a borrower may have difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, a Fund’s income may be reduced and the value of the investment in the participation interest might also decline.
Further, the seller of the participation interest will have no obligation to a Fund other than to pay a Fund
the proportionate amount of the principal and interest payments it receives from the borrower. In addition,
if the seller of the participation interest fails to perform its obligations, purchasers might incur costs and delays
in realizing payment and suffer a loss of principal and/or interest, including in cases where the borrower
may have performed its obligation to the lender that issued the participation (e.g., if the participation seller fails to pass along to a Fund payments received from the borrower). Although most participation interests purchased by a Fund are structured to cause a Fund to become beneficial owner of the relevant loans, and therefore avoid this outcome, if a lender that sells a Fund a participation interest becomes insolvent, a Fund may be treated as a general creditor of the lender. As a general creditor, a Fund will have to share the proceeds of the loan with any other creditors of the lender. A Fund will acquire a participation interest only if the Adviser or Sub-Adviser determines that the lender (or other intermediary Participant) selling the participation interest is creditworthy.
A Fund’s rights under a participation interest with respect to a particular loan may be more limited than the rights of original lenders or of investors who acquire an assignment of that loan. A Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation interest and only when the lender receives the payments from the borrower. In purchasing participation interests, a Fund will usually have a contractual relationship only with the selling institution
and not the underlying borrower. A Fund generally will have no right directly to enforce compliance by the borrower with the terms of the related loan agreement, nor will a Fund necessarily have the
right to object to certain changes to the loan agreement agreed to by the selling institution. If a Fund buys a participation interest in a loan, a Fund may be subject to any rights of set-off the borrower has against the selling institution (although recourse to the selling institution may be available in the event of any such set-off).
In the event of bankruptcy or insolvency of the borrower, the obligation of the borrower to repay the loan may
be subject to certain defenses that can be asserted by the borrower as a result of any improper conduct
of the lender selling the participation (although recourse to the lender may be available). As a result, a Fund
may be subject to delays, expenses and risks that are greater than those that exist when a Fund is an original
lender or assignee, and therefore a participation may be relatively illiquid as compared to a direct investment in a loan because of a smaller universe of investors who are willing to assume these additional risks present in a participation.
Other Investments
Regulation S Securities. Regulation S securities of U.S. and non-U.S. issuers are offered through private offerings without registration with the SEC pursuant to Regulation S of the
1933 Act. Offerings of Regulation S securities may be conducted outside of the United States, and Regulation
S securities may be relatively less liquid as a result of legal or contractual restrictions on resale. Although Regulation S securities may be resold in privately negotiated transactions, the price realized from these sales could be less than that originally paid by a Fund. Further, companies whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements that would be applicable
if their securities were
52
publicly traded. Accordingly, Regulation S securities may involve a high degree of business and financial risk
and may result in substantial losses.
Real Estate Investment Trusts (REITs). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interest therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States
or both. Equity REITs invest the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital gains by selling property
that has appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages
and derive income from the collection of interest payments.
Investments in REITs may be subject to many of the same risks as direct investments
in real estate. These risks include difficulties in valuing and trading real estate, declines in the
value of real estate, risks related to general and local economic conditions, adverse changes in the climate for
real estate, environmental liability risks, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values,
the appeal of properties to tenants, heavy cash flow dependency and increases in interest rates.
To the extent that a Fund invests in REITs, the Fund could conceivably acquire real estate directly as a result
of a default on the REIT interests or obligations it owns.
In addition to the risks of direct real estate investment described above, equity
REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage
REITs may be affected by the quality of any credit extended. REITs are also subject to the following
risks: they are dependent upon management skill and on cash flows; are not diversified; are subject
to defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption
from the 1940 Act; and are subject to interest rate risk. A Fund that invests in REITs will bear a proportionate
share of the expenses of the REITs.
Furthermore, for tax reasons, a REIT may impose limits on how much of its securities
any one investor may own. These ownership limitations (also called “excess share provisions”) may be based on ownership of securities by multiple funds and accounts managed by the same investment adviser and
typically result in adverse consequences (such as automatic divesture of voting and dividend rights for
shares that exceed the excess share provision) to investors who exceed the limit. A REIT’s excess share provision may result in a Fund being unable to purchase (or otherwise obtain economic exposure to) the desired
amounts of certain REITs. In some circumstances, a Fund may seek and obtain a waiver from a REIT to exceed the REIT’s ownership limitations without being subject to the adverse consequences of exceeding
such limit were a waiver not obtained, provided that the Fund complies with the provisions of the waiver.
Other Investment Companies. Unless otherwise indicated in this SAI or in a Fund’s prospectus, a Fund may purchase shares of other investment companies, including ETFs, non-exchange traded U.S. registered open-end investment companies (mutual funds), closed-end investment companies, or
non-U.S. investment companies traded on foreign exchanges. When a Fund purchases shares of another investment
company, the Fund will indirectly bear its proportionate share of the advisory fees and other operating
expenses of such investment company and will be subject to the risks associated with the portfolio
investments of the underlying investment company.
A Fund’s investment in the securities of other investment companies is subject to the applicable provisions of the 1940 Act and the rules thereunder. Specifically, Section 12(d)(1)
of the 1940 Act contains various limitations on the ability of a registered investment company (an “acquiring fund”) to acquire shares of another registered investment company (an “acquired fund”). Under these limits, an acquiring fund generally cannot (i) purchase more than 3% of the total outstanding voting stock of an acquired
fund; (ii) invest more than 5% of its total assets in securities issued by an acquired company; and (iii)
invest more than 10% of its total assets in securities issued by other investment companies. Likewise, an acquired
fund, as well as its principal underwriter or any broker or dealer registered under the Exchange Act, cannot
knowingly sell more than 3% of the total outstanding voting stock of the acquired fund to an acquiring
fund, or more than 10% of the total outstanding voting stock of the acquired fund to acquiring funds generally.
53
Rule 12d1-4 under the 1940 Act allows a fund to acquire the securities of another
investment company in excess of the limitations imposed by Section 12 without obtaining an exemptive order
from the SEC, subject to certain limitations and conditions. Among those conditions is the requirement that,
prior to a fund relying on Rule 12d1-4 to acquire securities of another fund in excess of the limits of Section
12(d)(1), the acquiring fund must enter into a Fund of Funds Agreement with the acquired fund. (This requirement
does not apply when the acquiring fund’s investment adviser acts as the acquired fund’s investment adviser and does not act as sub-adviser to either fund.)
Rule 12d1-4 also is designed to limit the use of complex fund structures. Under Rule
12d1-4, an acquired fund is prohibited from purchasing or otherwise acquiring the securities of another
investment company or private fund if, immediately after the purchase, the securities of investment companies
and private funds owned by the acquired fund have an aggregate value in excess of 10% of the value of the acquired fund’s total assets, subject to certain limited exceptions. Accordingly, to the extent a Fund’s shares are sold to other investment companies in reliance on Rule 12d1-4, the Fund will be limited in the amount
it could invest in other investment companies and private funds.
In addition to Rule 12d1-4, the 1940 Act and related rules provide other exemptions
from these restrictions. For example, these limitations do not apply to investments by a Fund
in investment companies that are money market funds, including money market funds that have the Adviser or
an affiliate of the Adviser as an investment adviser.
Limited Partnerships. A limited partnership interest entitles the Fund to participate in the investment
return of the partnership’s assets as defined by the agreement among the partners. As a limited partner, the Fund generally is not permitted to participate in the management of the partnership.
However, unlike a general partner whose liability is not limited, a limited partner’s liability generally is limited to the amount of its commitment to the partnership.
Master Limited Partnerships (MLPs). MLPs generally are limited partnerships (or limited liability companies), the common units of which are listed and traded on a national securities
exchange or over-the-counter. MLPs generally have two classes of partners, the general partner and the limited
partners. The general partner normally controls the MLP through an equity interest plus units that
are subordinated to the common (publicly traded) units for an initial period and then only converting to common
if certain financial tests are met. The general partner also generally receives a larger portion of the
net income as incentive. As cash flow grows, the general partner receives a greater interest in the incremental
income compared to the interest of limited partners.
MLP common units represent an equity ownership interest in a partnership, providing
limited voting rights and entitling the holder to a share of the company’s success through distributions and/or capital appreciation. Unlike shareholders of a corporation, common unit holders do not elect directors annually
and generally have the right to vote only on certain significant events, such as mergers, a sale of substantially
all of the assets, removal of the general partner or material amendments to the partnership agreement.
MLPs are required by their partnership agreements to distribute a large percentage of their current operating
earnings. Common unit holders generally have first right to a minimum quarterly distribution (MQD) prior
to distributions to the convertible subordinated unit holders or the general partner (including incentive
distributions). Common unit holders typically have arrearage rights if the MQD is not met. In the event of liquidation,
MLP common unit holders have first right to the partnership’s remaining assets after bondholders, other debt holders, and preferred unit holders have been paid in full.
The general partner or managing member interest in an MLP is typically retained by
the original sponsors of an MLP, such as its founders, corporate partners and entities that sell assets
to the MLP. The holder of the general partner or managing member interest can be liable in certain circumstances
for amounts greater than the amount of the holder’s investment in the general partner or managing member. General partner or managing member interests often confer direct board participation rights in, and in
many cases control over the operations of, the MLP. General partner or managing member interests can be privately
held or owned by publicly traded entities. General partner or managing member interests receive cash
distributions, typically in an amount of up to 2% of available cash, which is contractually defined in the partnership
or limited liability
54
company agreement. In addition, holders of general partner or managing member interests
typically receive incentive distribution rights (IDRs), which provide them with an increasing share of the entity’s aggregate cash distributions upon the payment of per common unit distributions that exceed specified
threshold levels above the MQD. Incentive distributions to a general partner are designed to encourage the
general partner, who controls and operates the partnership, to maximize the partnership’s cash flow and increase distributions to the limited partners. Due to the IDRs, general partners of MLPs have higher distribution
growth prospects than their underlying MLPs, but quarterly incentive distribution payments would also
decline at a greater rate than the decline rate in quarterly distributions to common and subordinated unit holders
in the event of a reduction in the MLP’s quarterly distribution. The ability of the limited partners or members to remove the general partner or managing member without cause is typically very limited. In addition,
some MLPs permit the holder of IDRs to reset, under specified circumstances, the incentive distribution
levels and receive compensation in exchange for the distribution rights given up in the reset.
Some companies in which a Fund may invest have been organized as limited liability
companies (MLP LLCs). Such MLP LLCs generally are treated in the same manner as MLPs for federal
income tax purposes (i.e., generally taxed as partnerships). MLP LLC common units trade on a national
securities exchange or OTC. In contrast to MLPs, MLP LLCs have no general partner and there are generally
no incentives that entitle management or other unitholders to increased percentages of cash distributions
as distributions reach higher target levels. In addition, MLP LLC common unitholders typically have voting
rights with respect to the MLP LLC, whereas MLP common units have limited voting rights.
Investments in securities of an MLP involve risks that differ from investments in
common stock, including risks related to limited control and limited rights to vote on matters affecting the
MLP, risks related to potential conflicts of interest between the MLP and the MLP’s general partner, cash flow risks, dilution risks and risks related to the general partner’s right to require unit-holders to sell their common units at an undesirable time or price. Certain MLP securities may trade in lower volumes due to their smaller capitalizations,
and may be subject to more abrupt or erratic price movements and lower market liquidity. MLPs
are generally considered interest-rate sensitive investments. During periods of interest rate volatility, these
investments may not provide attractive returns.
There are also certain tax risks undertaken by the Fund when it invests in MLPs. MLPs
are generally treated as partnerships for U.S. federal income tax purposes subject to the application of certain partnership audit rules. Partnerships do not pay U.S. federal income tax at the partnership level, subject
to the application of certain partnership audit rules. Rather, each partner is allocated a share of the partnership’s income, gains, losses, deductions and expenses. A change in current tax law or a change in the underlying
business mix of a given MLP could result in an MLP being treated as a corporation for U.S. federal income
tax purposes, which would result in the MLP being required to pay U.S. federal income tax (as well as
state and local income taxes) on its taxable income. This would have the effect of reducing the amount of
cash available for distribution by the MLP and could result in a reduction in the value of the Fund’s investment in the MLP and lower income to the Fund. Also, to the extent a distribution received by a Fund from
an MLP is treated as a return of capital, the Fund’s adjusted tax basis in the interests of the MLP will be reduced, which may increase the Fund’s tax liability upon the sale of the interests in the MLP or upon subsequent distributions in respect of such interests.
Private Equity and Debt Investments. Privately issued securities, which include private investments in public equity (PIPEs), and private debt investments, involve an extraordinarily high
degree of business and financial risk and can result in substantial or complete losses. Some portfolio companies
in which the Fund may invest may be operating at a loss or with substantial variations in operating
results from period to period and may need substantial additional capital to support expansion or to achieve or
maintain competitive positions. Such companies may face intense competition, including competition from
companies with much greater financial resources, much more extensive development, production, marketing
and service capabilities and a much larger number of qualified managerial and technical personnel. The Fund
can offer no assurance that the marketing efforts of any particular portfolio company will be successful
or that its business will succeed. Additionally, privately held companies are not subject to SEC reporting requirements
or the reporting requirements of publicly traded companies in applicable jurisdictions, are not required
to maintain their
55
accounting records in accordance with generally accepted accounting principles, and
are not required to maintain effective internal controls over financial reporting. As a result, the Adviser
may not have timely or accurate information about the business, financial conditions and results of operations
of the privately held companies in which the Fund invests. The more limited financial information and lack
of publicly available prices require a Fund to determine a fair value for such investments in accordance
with the valuation policy approved by the Board and related procedures. Difficulty in valuing such investments
may make it difficult to accurately determine a Fund's exposure to privately issued securities. The Fund’s NAV could be adversely affected if the Fund’s determinations regarding the fair value of the Fund’s investments were materially higher than the values that the Fund ultimately realizes upon the disposal of such investments.
In addition, input from the Adviser’s investment professionals as part of the Fund’s valuation process could result in a conflict of interest as the Adviser’s management fee is based, in part, on the value of the Fund’s assets.
Investments in private companies may be considered to be illiquid and may be difficult
to sell at a desirable time or at the prices at which the Fund has valued the investments. Additional
risks include that the Fund could be subject to contingent liabilities in the event a private issuer is acquired
by another company during the period it is held by the Fund; and that the company may be using excessive
leverage. Privately issued debt securities can often be below investment grade quality and frequently
are unrated.
Private Investments in Public Equity. PIPEs are equity securities in a private placement that are issued by issuers who have outstanding, publicly-traded equity securities of the same class.
Shares in PIPEs generally are not registered with the SEC until after a certain time period from the
date the private sale is completed. This restricted period can last many months. Until the public registration
process is completed, PIPEs are restricted as to resale and the Fund cannot freely trade the securities. Generally,
such restrictions cause the PIPEs to be illiquid during this time. PIPEs may contain provisions that the issuer will pay specified financial penalties to the holder if the issuer does not publicly register the restricted
equity securities within a specified period of time, but there is no assurance that the restricted equity securities
will be publicly registered, or that the registration will remain in effect.
Defaulted Securities. Defaulted securities are debt securities on which the issuer is not currently making
interest payments. In order to enforce its rights in defaulted securities, a Fund
may be required to participate in legal proceedings or take possession of and manage assets securing the issuer’s obligations on the defaulted securities. This could increase operating expenses and adversely affect
net asset value. Risks of defaulted securities may be considerably higher as they are generally unsecured and
subordinated to other creditors of the issuer. Investments in defaulted securities generally will also be
considered illiquid investments subject to the limitations described herein, except as otherwise may be
determined under the Trust’s applicable policies and procedures.
Variable or Floating Rate Instruments. Each Fund other than Invesco Short Duration Inflation Protected Fund may invest in variable or floating rate instruments. Variable or floating rate
instruments are securities that provide for a periodic adjustment in the interest rate paid on the obligation.
The interest rates for securities with variable interest rates are readjusted on set dates (such as the last
day of the month or calendar quarter) and the interest rates for securities with floating rates are reset
whenever a specified interest rate change occurs. Variable or floating interest rates generally reduce
changes in the market price of securities from their original purchase price because, upon readjustment, such rates
approximate market rates. Accordingly, as market interest rates decrease or increase, the potential for
capital appreciation or depreciation is less for variable or floating rate securities than for fixed rate
obligations. Many securities with variable or floating interest rates have a demand feature allowing the Fund to demand
payment of principal and accrued interest prior to its maturity. The terms of such demand instruments require
payment of principal and accrued interest by the issuer, a guarantor, and/or a liquidity provider. All
variable or floating rate instruments will meet the applicable rating standards of the Funds. A Fund’s Adviser, or Sub-Adviser, as applicable, may determine that an unrated floating rate or variable rate demand obligation meets the Fund’s rating standards by reason of being backed by a letter of credit or guarantee issued
by a bank that meets those rating standards.
56
The secondary market for certain floating rate loans may be subject to irregular trading
activity, wide bid/ask spreads and extended trade settlement periods (in some cases, longer than
seven days). Certain floating rate loans held by a Fund might not be considered securities for purposes
of the Exchange Act and therefore a risk exists that purchasers, such as the Funds, may not be entitled to
rely on the antifraud provisions of those Acts.
Zero Coupon and Pay-in-Kind Securities. Zero coupon securities do not pay interest or principal until final maturity, unlike debt securities that traditionally provide periodic payments
of interest (referred to as a coupon payment). Investors must wait until maturity to receive interest and principal,
which increases the interest rate and credit risks of a zero coupon security. Pay-in-kind securities are
securities that have interest payable by delivery of additional securities. Upon maturity, the holder is entitled
to receive the aggregate par value of the securities. Zero coupon and pay-in-kind securities may be subject to
greater fluctuation in value and lower liquidity in the event of adverse market conditions than comparably rated
securities paying cash interest at regular interest payment periods. Investors may purchase zero coupon and
pay-in-kind securities at a price below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents “original issue discount” on the security.
For Rule 2a-7 purposes (for Invesco Government Money Market Fund and Invesco U.S.
Government Money Portfolio), a variable rate security, the principal amount of which is scheduled
to be paid in more than 397 calendar days, that is subject to a demand feature, shall be deemed to have a
maturity equal to the longer of the period remaining until the next readjustment of the interest rate or
the period remaining until the principal amount can be recovered through demand. A floating rate security, the principal
amount of which, in accordance with the terms of the security, must unconditionally be paid in 397 calendar
days or less shall be deemed to have a maturity of one day.
Premium Securities. Premium securities are securities bearing coupon rates higher than the then prevailing market rates.
Premium securities are typically purchased at a “premium,” in other words, at a price greater than the principal amount payable on maturity. The Fund will not amortize the premium paid
for such securities in calculating its net investment income. As a result, in such cases the purchase of
premium securities provides the Fund a higher level of investment income distributable to shareholders on a current
basis than if the Fund purchased securities bearing current market rates of interest. However, the yield
on these securities would remain at the current market rate. If securities purchased by the Fund at a premium
are called or sold prior to maturity, the Fund will realize a loss to the extent the call or sale price is less
than the purchase price. Additionally, the Fund will realize a loss of principal if it holds such securities
to maturity.
Stripped Income Securities. Stripped Income Securities are obligations representing an interest in all or a portion of the income or principal components of an underlying or related security,
a pool of securities, or other assets. Stripped income securities may be partially stripped so that each class
receives some interest and some principal. However, they may be completely stripped, where one class will
receive all of the interest (the interest-only class or the IO class), while the other class will receive all
of the principal (the principal-only class or the PO class).
The market values of stripped income securities tend to be more volatile in response
to changes in interest rates than are conventional income securities. In the case of mortgage-backed
stripped income securities, the yields to maturity of IOs and POs may be very sensitive to principal
repayments (including prepayments) on the underlying mortgages resulting in a Fund being unable to recoup
its initial investment or resulting in a less than anticipated yield. The market for stripped income securities
may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price.
Privatizations. The governments of certain foreign countries have, to varying degrees, embarked on
privatization programs to sell part or all of their interests in government owned
or controlled companies or enterprises (privatizations). A Fund’s investments in such privatizations may include: (i) privately negotiated investments in a government owned or controlled company or enterprise; (ii) investments
in the initial offering
57
of equity securities of a government owned or controlled company or enterprise; and
(iii) investments in the securities of a government owned or controlled company or enterprise following its
initial equity offering.
In certain foreign countries, the ability of foreign entities such as the Fund to
participate in privatizations may be limited by local law, or the terms on which the Fund may be permitted to participate
may be less advantageous than those for local investors. There can be no assurance that foreign
governments will continue to sell companies and enterprises currently owned or controlled by them,
that privatization programs will be successful, or that foreign governments will not re-nationalize companies
or enterprises that have been privatized. If large blocks of these enterprises are held by a small group of stockholders
the sale of all or some portion of these blocks could have an adverse effect on the price.
Participation Notes. Participation notes, also known as participation certificates, are issued by banks
or broker-dealers and are designed to replicate the performance of foreign companies
or foreign securities markets and can be used by the Fund as an alternative means to access the securities
market of a country. Participation notes are generally traded OTC. The performance results of participation
notes will not replicate exactly the performance of the foreign company or foreign securities market that they
seek to replicate due to transaction and other expenses. Investments in participation notes involve the same
risks associated with a direct investment in the underlying foreign companies or foreign securities market
that they seek to replicate. In addition, participation notes are subject to counterparty risk, currency risk and
reinvestment risk. Counterparty risk is the risk that the broker-dealer or bank that issues them will
not fulfill its contractual obligation to complete the transaction with the Fund. Participation notes constitute
general unsecured contractual obligations of the banks or broker-dealers that issue them, and a Fund
is relying on the creditworthiness of such banks or broker-dealers and has no rights under a participation
note against the issuer of the underlying assets. Additionally, there is a currency risk since the dollar value of the Fund’s foreign investments will be affected by changes in the exchange rates between the
dollar and (a) the currencies in which the notes are denominated, such as euro denominated participation
notes, and (b) the currency of the country in which the foreign company sits. Also, there is a reinvestment
risk because the amounts from the note may be reinvested in a less valuable investment when the note
matures.
Investment Techniques
Forward Commitments, When-Issued and Delayed Delivery Securities. A Fund may purchase and sell securities on a when-issued and delayed delivery basis whereby the Fund buys
or sells a security with payment and delivery taking place in the future. Each Fund may purchase or sell securities
on a forward commitment, when-issued or delayed delivery basis. Securities purchased or sold on
a forward commitment, when-issued or delayed delivery basis involve delivery and payment that take place
in the future after the trade date or the date of the commitment to purchase or sell the securities at a pre-determined
price and/or yield. Settlement of such transactions normally occurs a month or more after the purchase
or sale commitment is made. Typically, no interest accrues to the purchaser until the security
is delivered. Forward commitments include “to be announced” (TBA) transactions, which are contracts for the purchase and sale of mortgage-backed securities issued or guaranteed by certain U.S. agencies or government
sponsored enterprises for delivery at a future settlement date agreed upon by the two parties
to the transaction, which is typically a month or more after the trade date of the transaction. On the trade date
of a TBA transaction, the counterparties agree upon certain criteria for the securities that are to be delivered,
including the issuer, maturity, coupon, face value and price, but the precise securities to be delivered
are not specified. Instead, the actual securities to be delivered, which must satisfy the specified criteria,
are communicated by the seller to the buyer shortly before the agreed upon settlement date. Although a Fund generally
intends to acquire or dispose of securities on a forward commitment, when-issued or delayed delivery basis,
a Fund may instead sell these securities or its commitment before the settlement date if deemed advisable.
This will frequently be the case for TBA transactions and other forward-settling mortgage-backed securities
transactions. No specific limitation exists as to the percentage of the Fund’s assets which may be used to acquire securities on a when-issued and delayed delivery basis.
When purchasing a security on a forward commitment, when-issued or delayed delivery
basis, a Fund assumes the risks of ownership of the security, including the risk of price and yield
fluctuations, and takes
58
such fluctuations into account when determining its net asset value. Securities purchased
on a forward commitment, when-issued or delayed delivery basis are subject to changes in value based upon the public’s perception of the creditworthiness of the issuer and changes, real or anticipated,
in the level of interest rates. Accordingly, securities acquired on such a basis may expose a Fund to risks because
they may experience such fluctuations prior to actual delivery. Purchasing securities on a forward commitment,
when-issued or delayed delivery basis may involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that obtained in the transaction itself.
Many forward commitments, when-issued and delayed delivery transactions, including
TBAs, are also subject to the risk that a counterparty may become bankrupt or otherwise fail to perform
its obligations due to financial difficulties, including making payments or fulfilling delivery obligations
to a Fund. A Fund may obtain no or only limited recovery in a bankruptcy or other reorganizational proceedings,
and any recovery may be significantly delayed. With respect to TBA transactions and other forward-settling
mortgage-backed securities transactions, the counterparty risk may be mitigated by the exchange of variation
margin between the counterparties on a regular basis as the market value of the deliverable security
fluctuates.
Investment in these types of securities may increase the possibility that the Fund
will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in
portfolio transactions in order to honor its commitment. In the case of a purchase transaction, the delayed delivery
securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded
as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery
securities is a liability of a Fund until settlement. TBA transactions and other forward-settling mortgage-backed
securities transactions may be effected pursuant to a collateral agreement with the counterparty under which
the parties exchange collateral consisting of cash or liquid securities in an amount as specified by the
agreement that is based on the change in the market value of the TBA transactions governed by the agreement.
A Fund or the counterparty will make payments throughout the term of the transaction as collateral
values fluctuate to maintain full collateralization for the term of the transaction. Collateral will be
marked-to-market every business day. If the counterparty defaults on the transaction or declares bankruptcy
or insolvency, a Fund might incur expenses in enforcing its rights, or the Fund might experience delay and
costs in recovering collateral or may suffer a loss if the value of the collateral declines.
Short Sales. The Funds, other than Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, may engage in short sales.
A short sale involves the sale of a security which a Fund does not own in the hope
of purchasing the same security at a later date at a lower price. To make delivery to the buyer, the
Fund must borrow the security from a broker. A Fund normally closes a short sale by purchasing an equivalent
number of shares of the borrowed security on the open market and delivering them to the broker. A short
sale is typically effected when the Fund’s Adviser believes that the price of a particular security will decline. Open short positions using options, futures, swaps or forward foreign currency contracts are not deemed to constitute
selling securities short.
To secure its obligation to deliver the securities sold short to the broker and repay
the securities borrowed, a Fund will be required to deposit cash or liquid securities with the broker as collateral.
In addition, a Fund may have to pay a fee or rate of interest to borrow the securities, and while the
loan of the security sold short is outstanding, the Fund is required to pay to the broker the amount of any dividends
paid on shares sold short. The collateral pledged by the Fund to the broker in connection with short sales
will be marked to market daily. The collateral pledged does not have the effect of limiting the amount of money
that a Fund may lose on a short sale.
Short positions create a risk that the Fund will be required to cover them by buying
the security at a time when the security has appreciated in value, thus resulting in a loss to the Fund.
A short position in a security poses more risk than holding the same security long. Because a short position loses value as the security’s price increases, the loss on a short sale is theoretically unlimited. The loss on
a long position is limited to what the Fund originally paid for the security together with any transaction costs. A Fund
may not always be able to borrow a security a Fund seeks to sell short at a particular time or at an acceptable
price. It is possible that
59
the market value of the securities the Fund holds in long positions will decline at
the same time that the market value of the securities the Fund has sold short increases, thereby increasing the Fund’s potential volatility and losses. Because a Fund may be required to pay dividends, interest,
premiums and other expenses in connection with a short sale, any benefit for the Fund resulting from
the short sale will be decreased, and the amount of any ultimate gain or loss will be decreased or increased,
respectively, by the amount of such expenses.
Short sales against the box are short sales of securities that a Fund owns or has
the right to obtain (equivalent in kind or amount to the securities sold short). If a Fund enters into
a short sale against the box, it will be required to set aside securities equivalent in kind and amount to the securities
sold short (or securities convertible or exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Fund will incur transaction costs, including fees or interest
expenses, in connection with opening, maintaining, and closing short sales against the box.
Invesco Global Real Estate Fund and Invesco Real Estate Fund are permitted and intend
from time to time to effect short sales that are not “against the box.” In a short sale that is not “against the box,” Invesco Global Real Estate Fund and Invesco Real Estate Fund do not own the security borrowed.
To secure its obligation to deliver to such broker-dealer the securities sold short, Invesco Global
Real Estate Fund and Invesco Real Estate Fund must segregate an amount of cash or liquid securities equal
to the difference between the current market value of the securities sold short and any cash or liquid
securities deposited as collateral with the broker in connection with the short sale (including the proceeds
of the short sale). The amounts deposited with the broker or segregated with the custodian do not have the
effect of limiting the amount of money that the Funds may lose on a short sale. In a short sale that is not “against the box,” Invesco Global Real Estate Fund and Invesco Real Estate Fund will normally close out
a short position by purchasing on the open market and delivering to the broker-dealer an equal amount
of the securities sold short.
Invesco Global Real Estate Fund and Invesco Real Estate Fund will realize a gain if
the price of a security declines between the date of the short sale and the date on which the Fund replaces
the borrowed security. On the other hand, the Fund will incur a loss if the price of the security increases
between those dates. The amount of any gain will be decreased and the amount of any loss increased by any premium
or interest that the Fund may be required to pay in connection with a short sale. It should be noted
that possible losses from short sales that are not “against the box” differ from those that could arise from a cash investment in a security in that losses from short sales that are not “against the box” may be limitless, while the losses from a cash investment in a security cannot exceed the total amount of the Fund’s investment in the security. For example, if the Fund purchases a $10 security, potential loss is limited to $10; however,
if the Fund sells a $10 security short, it may have to purchase the security for return to the broker-dealer
when the market value of that security is $50, thereby incurring a loss of $40.
Short sales against the box result in a “constructive sale” and require a Fund to recognize any taxable gain unless an exception to the constructive sale applies. See “Dividends, Distributions and Tax Matters — Tax Matters — Tax Treatment of Portfolio Transactions — Options, futures, forward contracts, swap agreements and hedging transactions.”
Margin Transactions. The Funds will not purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases
and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with
futures, swaps or options transactions and the use of a reverse repurchase agreement to finance the purchase
of a security will not be considered the purchase of a security on margin.
Interfund Loans. The SEC has issued an exemptive order permitting the Invesco Funds to borrow money from and lend money to each other for temporary or emergency purposes. The Invesco Funds’ interfund lending program is subject to a number of conditions, including the requirements
that: (1) an interfund loan generally will occur only if the interest rate on the loan is more
favorable to the borrowing fund than the interest rate typically available from a bank for a comparable transaction
and the rate is more favorable to the lending fund than the rate available on overnight repurchase transactions;
(2) an Invesco
60
Fund may not lend more than 15% of its net assets through the program (measured at
the time of the last loan); and (3) an Invesco Fund may not lend more than 5% of its net assets to another
Invesco Fund through the program (measured at the time of the loan). A Fund may participate in the program
only if and to the extent that such participation is consistent with the Fund’s investment objective and investment policies. Interfund loans have a maximum duration of seven days. Loans may be called with one day’s notice and may be repaid on any day. At the current time, the Funds do not participate in interfund lending.
Borrowing. The Funds may borrow money to the extent permitted under the 1940 Act Laws, Interpretations and Exemptions (defined below) and Fund Policies. Such borrowings
may be utilized (i) for temporary or emergency purposes; (ii) in anticipation of or in response to adverse
market conditions; or, (iii) for cash management purposes. The prospectus may specify other reasons for which such
borrowings may be utilized. The Funds may also borrow money to purchase additional securities when
Invesco or the Sub-Adviser, as applicable, deems it advantageous to do so. All borrowings are limited to an amount
not exceeding 33 1/3% of a Fund’s total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that exceed this amount will be reduced within three business
days to the extent necessary to comply with the 33 1/3% limitation even if it is not advantageous to
sell securities at that time.
If there are unusually heavy redemptions, a Fund may have to sell a portion of its
investment portfolio at a time when it may not be advantageous to do so. Selling Fund securities under these
circumstances may result in a lower net asset value per share or decreased dividend income, or both.
Invesco and the Sub-Advisers believe that, in the event of abnormally heavy redemption requests, a Fund’s borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio
securities less likely.
The ability of the Funds to borrow money to purchase additional securities, as described in the applicable prospectus, gives the Funds greater flexibility to purchase securities for investment or tax
reasons and not to be dependent on cash flows. To the extent borrowing costs exceed the return on the
additional investments; the return realized by the Fund’s shareholders will be adversely affected. The Fund’s borrowing to purchase additional securities creates an opportunity for a greater total return to the Fund,
but, at the same time, increases exposure to losses. The Fund’s willingness to borrow money for investment purposes, and the amount it borrows depends upon many factors, including investment outlook, market
conditions and interest rates. Successful use of borrowed money to purchase additional investments depends on Invesco’s or the Sub-Adviser’s ability to predict correctly interest rates and market movements; such a strategy may not be successful during any period in which it is employed.
The Funds may borrow from a bank, broker-dealer, or another Invesco Fund. Additionally,
the Funds are permitted to temporarily carry a negative or overdrawn balance in their account with
their custodian bank. To compensate the custodian bank for such overdrafts, the Funds may either (i) leave
funds as a compensating balance in their account so the custodian bank can be compensated by earning interest
on such funds; or (ii) compensate the custodian bank by paying it an agreed upon rate.
Lending Portfolio Securities. Each Fund may lend its portfolio securities (principally to brokers, dealers or other financial institutions) to generate additional income. Such loans are callable
at any time and are continuously secured by segregated collateral equal to no less than the market value,
determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities
issued or guaranteed by the U.S. government or any of its agencies. Each Fund may lend portfolio securities to
the extent of one-third of its total assets. A Fund will loan its securities only to parties that Invesco has
determined are in good standing and when, in Invesco’s judgment, the potential income earned would justify the risks.
Although voting rights may pass with the lending of portfolio securities, a Fund will
be entitled to call loaned securities, or otherwise obtain rights to vote or consent, when deemed necessary
by Invesco with respect to a material event affecting securities on loan. The Fund would receive income
in lieu of dividends on loaned securities and may, at the same time, generate income on the loan collateral
or on the investment of any cash collateral.
If the borrower defaults on its obligation to return the securities loaned because
of insolvency or other reasons, a Fund could experience delays and costs in recovering securities loaned
or gaining access to the
61
collateral. If the Fund is not able to recover the securities loaned, the Fund may
sell the collateral and purchase a replacement security in the market. Lending securities entails a risk of
loss to the Fund if and to the extent that the market value of the loaned securities increases and the collateral
is not increased accordingly.
Any cash received as collateral for loaned securities will be invested, in accordance with a Fund’s investment guidelines, in short-term money market instruments, affiliated unregistered
investment companies that are compliant with Rule 2a-7 or Affiliated Money Market Funds. Investing this
cash subjects that investment to market appreciation or depreciation. For purposes of determining whether
a Fund is complying with its investment policies, strategies and restrictions, the Fund will consider
the loaned securities as assets of the Fund, but will not consider any collateral received as a Fund asset. The Fund
will bear any loss on the investment of cash collateral.
For a discussion of tax considerations relating to lending portfolio securities, see “Dividends, Distributions and Tax Matters — Tax Matters — Tax Treatment of Portfolio Transactions — Securities Lending.”
Repurchase Agreements. Each Fund may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
Repurchase agreements are agreements under which a Fund purchases a security from
a broker-dealer or bank that agrees to repurchase that security at a mutually agreed upon time and
price (which is higher than the purchase price), thereby resulting in a yield to the Fund during a Fund’s holding period. A Fund may enter into a “continuing contract” or “open” repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying securities from the Fund on demand and the
effective interest rate is negotiated on a daily basis. Repurchase agreements may be viewed as loans made by
a Fund which are collateralized by the securities subject to repurchase.
In any repurchase agreement, the securities that are subject to the transaction may
be obligations issued by the U.S. government or its agencies or instrumentalities. Invesco Government Money
Market Fund and Invesco U.S. Government Money Portfolio consider repurchase agreements with the Federal
Reserve Bank of New York to be U.S. government securities for purposes of the Funds’ investment policies. The Funds may also engage in repurchase agreements collateralized by non-government securities that
are rated investment grade or below investment grade by the requisite NRSROs or unrated securities of comparable
quality, loan participations, and equities.
If the seller of a repurchase agreement fails to repurchase the security in accordance
with the terms of the agreement, a Fund might incur expenses in enforcing its rights, and could experience
a loss on the sale of the security subject to the repurchase agreement to the extent that the sale proceeds
including accrued interest are less than the resale price provided in the repurchase agreement, including interest.
In addition, although the Bankruptcy Code and other insolvency laws may provide certain protections for
some types of repurchase agreements, if the seller of a repurchase agreement should be involved in bankruptcy
or insolvency proceedings, a Fund may incur delay and costs in selling the underlying security or
may suffer a loss of principal and interest if the value of the underlying security declines or the Fund
may be deemed to be an unsecured creditor and be required to return the securities to the seller.
The Funds may enter into repurchase agreements that involve securities that may be
subject to a court- ordered or other “stay” in the event of the seller’s bankruptcy or insolvency. A “stay” will prevent a Fund from selling the securities it holds under a repurchase agreement until permitted by a
court or other authority. In these situations a Fund may be subject to greater risk that the value of the securities
may decline before they are sold, and that a Fund may experience a loss.
The securities underlying a repurchase agreement will be marked-to-market every business
day, and if the value of the securities falls below a specified percentage of the repurchase price
(typically 102%), the counterparty will be required to deliver additional collateral to a Fund in the form
of cash or additional securities. Custody of the securities will be maintained by a Fund’s custodian or sub-custodian for the duration of the agreement.
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The Funds may invest their cash balances in joint accounts with other Invesco Funds
for the purpose of investing in repurchase agreements with maturities not to exceed 60 days that are
collateralized by cash or government securities, and in certain other money market instruments with remaining
maturities not to exceed 90 days. Repurchase agreements may be considered loans by a Fund under the 1940 Act.
Invesco Short Duration Inflation Protected Fund may invest in repurchase agreements
with banks and broker-dealers pertaining to U.S. Treasury obligations. However, in order to maximize
the Fund's dividends which are exempt from state income taxation, as a matter of operating policy, the
Fund does not currently invest in repurchase agreements.
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio will
not enter into a repurchase agreement that causes more than 5% of their total assets at the
time of purchase to be subject to repurchase agreements having a maturity beyond seven days.
Restricted and Illiquid Investments. Each Fund other than Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may not acquire any illiquid investment
if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid
investments. Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may not acquire
any illiquid security if, immediately after the acquisition, the Fund would have invested more
than 5% of its total assets in illiquid investments.
For purposes of the above 15% limitation, illiquid investment means any investment
that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven
calendar days or less without the sale or disposition significantly changing the market value of the investment,
as determined pursuant to the 1940 Act and applicable rules and regulations thereunder. Illiquid
investments may include a wide variety of investments, such as, for example: (1) repurchase agreements maturing
in more than seven days (unless the agreements have demand/redemption features); (2) OTC options contracts
and certain other derivatives (including certain swap agreements); (3) fixed time deposits that are
not subject to prepayment or that provide for withdrawal penalties upon prepayment (other than overnight deposits);
(4) loan interests and other direct debt instruments; (5) municipal lease obligations; (6) commercial paper
issued pursuant to Section 4(2) of the 1933 Act; and (7) securities that are unregistered, that can be
sold to qualified institutional buyers in accordance with Rule 144A under the 1933 Act, or that are exempt from registration
under the 1933 Act or otherwise restricted under the federal securities laws, including private placement
securities sold pursuant to Regulation S. For purposes of Invesco Government Money Market Fund and
Invesco U.S. Government Money Portfolio’s 5% limitation, an illiquid security means a security that cannot be sold or disposed of in the ordinary course of business within seven calendar days at approximately
the value ascribed to it by the Fund, as determined pursuant to the 1940 Act and applicable rules and
regulations thereunder.
Limitations on the resale of restricted investments may have an adverse effect on
their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. The
Fund may have to bear the expense of registering such securities for resale, and the risk of substantial
delays in effecting such registrations. A Fund’s difficulty valuing and selling restricted securities or illiquid investments may result in a loss or be costly to the Fund.
If a substantial market develops for a restricted security or illiquid investment
held by a Fund, it may be treated as a liquid investment, in accordance with procedures and guidelines adopted
by the Board on behalf of the Funds.
Rule 144A Securities. Rule 144A securities are securities which, while initially privately placed, are eligible for purchase and resale pursuant to Rule 144A under the 1933 Act. This Rule
permits certain qualified institutional buyers, such as the Funds, to trade in the securities even though such securities are not registered under the 1933 Act. Pursuant to Rule 22e-4 under the 1940 Act, a Fund will
consider whether securities purchased under Rule 144A are illiquid and thus subject to the Fund’s restriction on illiquid investments. The determination of whether a Rule 144A security is liquid or illiquid
will take into account relevant market trading, and investment-specific considerations consistent with applicable
SEC guidance. Additional factors that may be considered include the (i) frequency of trades and
quotes; (ii) number of
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dealers and potential purchasers; (iii) dealer undertakings to make a market; and
(iv) nature of the security and of market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). Investing in Rule 144A securities could increase the amount of a Fund’s illiquid investments if qualified institutional buyers are unwilling to purchase such
securities.
Reverse Repurchase Agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by a Fund to financial institutions such as banks and broker-dealers,
with an agreement that the Fund will repurchase the securities at an agreed upon price and date or upon
demand. During the reverse repurchase agreement period, the Fund continues to receive interest and principal
payments on the securities sold, but pays interest to the other party on the proceeds received. A
Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated
net redemptions so as to avoid liquidating other portfolio securities during unfavorable
market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements;
or (iii) to take advantage of market situations where the interest income to be earned from the investment of the
proceeds of the transaction is greater than the interest expense of the transaction.
Reverse repurchase agreements are a form of leverage and involve the risk that the
market value of securities to be repurchased by the Fund may decline below the price at which the
Fund is obligated to repurchase the securities, resulting in a requirement for the Fund to deliver margin
to the other party in the amount of the related shortfall, or that the other party may default on its obligation,
so that the Fund is delayed or prevented from completing the transaction. Leverage may make the Fund’s returns more volatile and increase the risk of loss. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, a Fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities.
Mortgage Dollar Rolls. A dollar roll is a type of transaction that involves the sale by a Fund of a mortgage-backed security to a financial institution such as a bank or broker dealer,
with an agreement that the Fund will repurchase a substantially similar (i.e., same type, coupon and maturity)
security at an agreed upon price and date. The mortgage securities that are purchased will bear the same interest
rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment
histories. During the period between the sale and repurchase, a Fund will not be entitled to receive interest
or principal payments on the securities sold but is compensated for the difference between the current sales
price and the forward price for the future purchase. A Fund typically enters into a dollar roll transaction to enhance the Fund’s return either on an income or total return basis or to manage pre-payment risk.
Dollar roll transactions involve the risk that the market value of the securities
retained by a Fund may decline below the price of the securities that the Fund has sold but is obligated
to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files
for bankruptcy or becomes insolvent, a Fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities.
Unless the benefits of the sale exceed the income, capital appreciation or gains on
the securities sold as part of the dollar roll, the investment performance of a Fund will be less than what
the performance would have been without the use of dollar rolls. The benefits of dollar rolls may depend upon the Adviser or Sub-Adviser’s ability to predict mortgage repayments and interest rates. There is no assurance
that dollar rolls can be successfully employed.
Standby Commitments. Certain Funds may acquire securities that are subject to standby commitments from banks or other municipal securities dealers. Under a standby commitment a bank
or dealer would agree to purchase, at the Fund’s option, specified securities at a specified price. Standby commitments generally increase the cost of the acquisition of the underlying security, thereby reducing
the yield. Standby commitments depend upon the issuer’s ability to fulfill its obligation upon demand. Although no definitive
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creditworthiness criteria are used for this purpose, Invesco reviews the creditworthiness
of the banks and other municipal securities dealers from which the Funds obtain standby commitments
in order to evaluate those risks.
Sale of Money Market Securities. Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio do not seek profits through short-term trading and will
generally hold portfolio securities to maturity. However, the Adviser and/or Sub-Adviser may seek to enhance
the yield of the Fund by taking advantage of yield disparities that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different prices. Also, there frequently
are differences in yields between various types of money market securities. The Adviser and/or Sub-Adviser may
dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds
are expected to enhance yield consistent with the Adviser’s and/or Sub-Adviser’s judgment as to desirable portfolio maturity structure. The Adviser and/or Sub-Adviser may also dispose of any portfolio security
prior to maturity to meet redemption requests, and as a result of a revised credit evaluation of the issuer
or other circumstances or considerations. This procedure may increase or decrease the Fund’s yield depending upon the Adviser’s and/or Sub-Adviser’s ability to correctly time and execute such transactions. The Fund’s policy of investing in securities with maturities of 397 calendar days or less will result in high portfolio
turnover. Since brokerage commissions are not normally paid on investments of the type made by the Fund, the
high turnover should not adversely affect the Fund’s net income.
Derivatives
Each Fund, except Invesco Government Money Market Fund and Invesco U.S. Government
Money Portfolio may invest in derivatives. A derivative is a financial instrument whose
value is dependent upon the value of other assets, rates or indices, referred to as “underlying reference assets.” These underlying reference assets may include, among others commodities, stocks, bonds, interest rates,
currency exchange rates or related indices. Derivatives include, among others, swaps, options, futures
and forward foreign currency contracts. Some derivatives, such as futures and certain options, are traded
on U.S. commodity and securities exchanges, while other derivatives, such as many types of swap agreements,
are privately negotiated and entered into in the OTC market. In addition, the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) and implementing rules require
certain types of swaps to be traded on public execution facilities and centrally cleared.
Derivatives may be used for “hedging,” which means that they may be used when the portfolio managers seek to protect the Fund’s investments from a decline in value, which could result from changes in interest rates, market prices, currency fluctuations and other market factors. Derivatives
may also be used when the portfolio managers seek to increase liquidity, implement a tax or cash management
strategy, invest in a particular stock, bond or segment of the market in a more efficient or less expensive
way, modify the characteristics of the Fund’s portfolio investments, for example, duration, and/or to enhance return. However derivatives are used, their successful use is not assured and will depend upon, among
other factors, the portfolio managers’ ability to predict and understand relevant market movements.
Certain derivatives involve leverage, that is, the amount invested may be smaller
than the full economic exposure of the derivative instrument and the Fund could lose more than it invested.
The leverage involved in these derivative transactions may result in the Fund’s net asset value being more sensitive to changes in the value of its investments.
Commodity Exchange Act (CEA) Regulation and Exclusions:
With respect to the Funds, Invesco has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the CEA and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition,
Invesco is relying upon a related exclusion from the definition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Funds.
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The terms of the CPO exclusion require the Funds, among other things, to adhere to
certain limits on their investments in “commodity interests.” Commodity interests include commodity futures, commodity options and swaps, which in turn include non-deliverable forwards, as further described below.
Because Invesco and the Funds intend to comply with the terms of the CPO exclusion, the Funds may, in the
future, need to adjust their investment strategies, consistent with their investment objectives, to limit their
investments in these types of instruments. The Funds are not intended as vehicles for trading in the commodity futures,
commodity options or swaps markets. The CFTC has neither reviewed nor approved Invesco’s reliance on these exclusions, or the Funds, their investment strategies, their prospectuses or this SAI.
Generally, the exclusion from CPO regulation on which Invesco relies requires the
Funds to meet one of the following tests for their commodity interest positions, other than positions entered
into for bona fide hedging purposes (as defined in the rules of the CFTC): either (1) the aggregate initial
margin and premiums required to establish the Fund’s positions in commodity interests may not exceed 5% of the liquidation value of the Fund’s portfolio (after taking into account unrealized profits and unrealized losses on any such positions); or (2) the aggregate net notional value of each Fund’s commodity interest positions, determined at the time the most recent such position was established, may not exceed 100% of the
liquidation value of the Fund’s portfolio (after taking into account unrealized profits and unrealized losses on any such positions). In addition to meeting one of these trading limitations, each Fund may not market itself
as a commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or
swaps markets. If, in the future, a Fund can no longer satisfy these requirements, Invesco would withdraw its
notice claiming an exclusion from the definition of a CPO, and Invesco would be subject to registration
and regulation as a CPO with respect to the Fund, in accordance with the CFTC rules that allow for substituted
compliance with CFTC disclosure and shareholder reporting requirements based on Invesco’s compliance with comparable SEC requirements. However, as a result of CFTC regulation with respect to the Fund, a
Fund may incur additional compliance and other expenses.
General risks associated with derivatives:
The use by the Funds of derivatives may involve certain risks, as described below.
Counterparty Risk: The risk that a counterparty under a derivatives agreement will not live up to its
obligations, including because of the counterparty’s bankruptcy or insolvency. Certain agreements may not contemplate delivery of collateral to support fully a counterparty’s contractual obligation; therefore, the Fund might need to rely solely on contractual remedies to satisfy the counterparty’s full obligation. As with any contractual remedy, there is no guarantee that the Fund will be successful in pursuing
such remedies, particularly in the event of the counterparty’s bankruptcy or insolvency. Many derivative trading agreements, such as an ISDA Master Agreement governing OTC swaps, provide for netting of derivatives
transactions governed by the agreement in the event of a default by either counterparty, pursuant to which the Fund’s and the counterparty’s obligations under the relevant transactions can be netted and set-off against each other, in which case a Fund’s obligation or right will be the net amount owed to or by the counterparty. Netting agreements are intended to function as a counterparty credit risk mitigant, but in
the case of a bankruptcy or insolvency of the relevant counterparty, are subject to the risk that the insolvency
regime applicable to the counterparty might not recognize the enforceability of the contractual netting provisions.
The Fund will not enter into a derivative transaction with any counterparty that Invesco and/or the
Sub-Advisers believe does not have the financial resources to honor its obligations under the transaction. Invesco
monitors the financial stability of counterparties. Where the obligations of the counterparty are guaranteed,
Invesco monitors the financial stability of the guarantor and the counterparty. If a counterparty’s creditworthiness declines, the value of the derivative would also likely decline, potentially resulting in losses to the
Fund.
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. Leverage may cause the Fund to
be more volatile because it may exaggerate the effect of any increase or decrease in the value of the Fund’s portfolio securities. The use of some derivatives may result in economic leverage, which does
not result in the
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possibility of the Fund incurring obligations beyond its initial investment, but that
nonetheless permits the Fund to gain exposure that is greater than would be the case in an unlevered instrument.
Liquidity Risk: The risk that a particular derivative is difficult to sell or liquidate. If a derivative
transaction is particularly large or if the relevant market is illiquid, it may not be possible to
initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses
to the Fund.
Pricing Risk: The risk that the value of a particular derivative does not move in tandem or as
otherwise expected relative to the corresponding underlying instruments.
Special Regulatory Risks of Derivatives: The regulation of derivatives is a rapidly changing area of law and is subject to modification by government and judicial action. In addition, the
SEC, CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency,
including, for example, the implementation or reduction of speculative position limits, the implementation
of higher margin requirements, the establishment of daily price limits and the suspension of trading.
It is not possible to predict fully the effects of current or future regulation. However,
it is possible that developments in government regulation of various types of derivative instruments,
such as speculative position limits on certain types of derivatives, or limits or restrictions on the
counterparties with which the Fund engages in derivative transactions, may limit or prevent the Fund from using or limit the Fund’s use of these instruments effectively as a part of its investment strategy, and could adversely affect the Fund’s ability to achieve its investment objective. Invesco will continue to monitor developments in
the area, particularly to the extent regulatory changes affect the Fund’s ability to enter into desired swap agreements. New requirements, even if not directly applicable to the Fund, may increase the cost of the Fund’s investments and cost of doing business.
Regulatory Risk: The risk that a change in laws or regulations will materially impact a security or
market.
Tax Risks: For a discussion of the tax considerations relating to derivative transactions, see “Dividends, Distributions and Tax Matters — Tax Matters — Tax Treatment of Portfolio Transactions.”
General risks of hedging strategies using derivatives:
The use by the Funds of hedging strategies involves special considerations and risks,
as described below.
Successful use of hedging transactions depends upon Invesco’s and the Sub-Advisers’ ability to predict correctly the direction of changes in the value of the applicable markets and securities,
contracts and/or currencies. While Invesco and the Sub-Advisers are experienced in the use of derivatives
for hedging, there can be no assurance that any particular hedging strategy will succeed.
In a hedging transaction, there might be imperfect correlation, or even no correlation,
between the price movements of an instrument used for hedging and the price movements of the investments
being hedged. Such a lack of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures
on the markets in which the hedging instrument is traded.
Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging
strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. Investors should bear in mind that a Fund is not obligated to actively
engage in hedging. For example, a Fund may not have attempted to hedge its exposure to a particular foreign
currency at a time when doing so might have avoided a loss.
Types of derivatives:
Swaps. Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government
Money Portfolio may engage in certain strategies involving swaps to attempt to manage
the risk of their investments or, in certain circumstances, for investment purposes (e.g., as a substitute
for investing in
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securities), to speculate on future volatility levels or to decrease the volatility
exposure of other investments held by the Fund.
Generally, swap agreements are contracts between a Fund and another party (the counterparty)
involving the exchange of payments on specified terms over periods ranging from a few days to
multiple years. A swap agreement may be negotiated bilaterally and traded OTC between the two parties (for
an uncleared swap) or, in some instances, must be transacted through a futures commission merchant (FCM)
and cleared through a clearinghouse that serves as a central counterparty (for a cleared swap). In a basic
swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in returns)
and/or cash flows earned or realized on a particular asset such as an equity or debt security, commodity,
currency, interest rate or index, calculated with respect to a “notional amount.” The notional amount is the set amount selected by the parties to use as the basis on which to calculate the obligations that the parties
to a swap agreement have agreed to exchange. The parties typically do not exchange the notional amount. Instead,
they agree to exchange the returns that would be earned or realized if the notional amount were
invested in given investments or at given interest rates. Examples of returns that may be exchanged
in a swap agreement are those of a particular security, a particular fixed or variable interest rate, a particular
foreign currency, or a “basket” of securities representing a particular index. Swap agreements can also be based on credit and other events. In some cases, such as cross currency swaps, the swap agreement may require
delivery (exchange) of the entire notional value of one designated currency for another designated currency.
A Fund will typically only enter into swap agreements with counterparties who use
standard International Swap and Dealers Association, Inc. (“ISDA”) contract documentation. ISDA establishes industry standards for the documentation of swap agreements. Virtually all principal swap participants use
ISDA documentation because it has an established set of definitions, contract terms and counterparty
obligations, including provisions for master netting agreements. It is possible that developments in the
swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally,
ISDA master agreements include credit related contingent features which allow Counterparties to
OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements,
which would cause the Fund to accelerate payment of any net liability owed to the counterparty.
Comprehensive swaps regulation. The Dodd-Frank Act and analogous international laws enacted after the financial crisis imposed comprehensive regulatory requirements on swaps and swap
market participants. The U.S. regulatory framework includes: (1) registration and regulation of swap dealers
and major swap participants; (2) requiring central clearing and electronic execution of standardized
swaps on swap execution facilities; (3) imposing margin requirements on uncleared swap transactions; (4) regulating
and monitoring swap transactions through position limits and large trader reporting requirements;
and (5) imposing record keeping and centralized and public reporting requirements, on an anonymous basis,
for most swaps. The CFTC is responsible for the regulation of most swaps. The SEC has jurisdiction over
a small segment of the market referred to as “security-based swaps,” which includes swaps on single securities or narrow-based indices of securities and single name credit default swaps.
Uncleared swaps. In an uncleared swap, the swap counterparty is typically a brokerage firm, bank or
other financial institution. In the event that one party to the swap transaction defaults
and the transaction is terminated prior to its scheduled termination date, one of the parties may be required
to make an early termination payment to the other. An early termination payment may be payable by either
the defaulting party or the non-defaulting party, under certain circumstances, depending upon which of them is “in-the-money” with respect to the swap at the time of its termination. Early termination payments
may be calculated in various ways, but generally represent the amount that the “in-the-money” party would have to pay to replace the swap as of the date of its termination.
During the term of an uncleared swap, a Fund will be required to pledge to the swap
counterparty, from time to time, an amount of cash and/or other assets equal to the total net amount
(if any) that would be payable by the Fund to the counterparty if all outstanding swaps between the parties
were terminated on the
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date in question, including any early termination payments (variation margin). Periodically,
changes in the amount pledged are made to recognize changes in value of the swap contract resulting
from, among other things market value changes in the underlying investment referenced in the swap. Likewise,
the counterparty will be required to pledge cash or other assets to cover its obligations to a Fund.
However, the amount pledged will not always be equal to or more than the amount due to the other party.
Therefore, if a counterparty defaults in its obligations to a Fund, the amount pledged by the counterparty
and available to the Fund may not be sufficient to cover all the amounts due to the Fund and the Fund may
sustain a loss.
Regulations requiring initial margin to be posted by certain market participants for
uncleared swaps have been adopted and are being phased in over time. When these rules take effect with
respect to the Funds, if a Fund is deemed to have material swaps exposure (generally, an average gross notional
amount of uncleared swaps and foreign currency forward contracts at certain measurement dates exceeding
$8 billion), it will under these regulations be required to post initial margin in addition to variation margin.
Uncleared swaps are not traded on exchanges. As a result, swap participants may not
be as protected as participants on organized exchanges. Performance of a swap agreement is the responsibility
only of the swap counterparty and not of any exchange or clearinghouse. As a result, a Fund is subject
to the risk that a counterparty will be unable or will refuse to perform under such agreement, including
because of the counterparty’s bankruptcy or insolvency. The Fund risks the loss of the accrued but unpaid amounts under a swap agreement, which could be substantial, in the event of a default, insolvency
or bankruptcy by a swap counterparty. In such an event, the Fund will have contractual remedies pursuant to
the swap agreement, but bankruptcy and insolvency laws could affect the Fund’s rights as a creditor. If the counterparty’s creditworthiness declines, the value of a swap agreement would likely decline, potentially
resulting in losses.
Cleared Swaps. Certain standardized swaps are subject to mandatory central clearing and trading
on execution facilities. The Dodd-Frank Act and analogous international laws will ultimately
require the clearing and trading on execution facilities of many swaps. To date, the CFTC has designated
only certain of the most common credit default index swaps and certain interest rate swaps as subject to mandatory
clearing and certain public execution facilities have made these swaps available to trade, but
it is expected that additional categories of swaps will in the future be designated as subject to mandatory clearing
and trade execution requirements.
In a cleared swap, a Fund’s ultimate counterparty is a central clearinghouse rather than a brokerage firm, bank or other financial institution. Cleared swaps are submitted for clearing through each party’s FCM, which must be a member of the clearinghouse that serves as the central counterparty.
When a Fund enters into a cleared swap, it must deliver to the clearinghouse (via
the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the clearinghouse, and are typically calculated as an amount based on the volatility in market value of the cleared
swap over a fixed period, but an FCM may require additional initial margin above the amount required
by the clearinghouse. During the term of the swap agreement, “variation margin” may also be required to be paid by the Fund or may be received by the Fund. If the value of the Fund’s cleared swap declines, the Fund will be required to make additional variation margin payments to the FCM to settle the change in value.
Conversely, if the market value of the Fund’s position increases, the FCM will post additional variation margin to the Fund’s account. At the conclusion of the term of the swap agreement, if the Fund has a loss equal to
or greater than the margin amount, the margin amount is paid to the FCM along with any loss in excess of the
margin amount. If the Fund has a loss of less than the margin amount, the excess margin is returned to the
Fund. If the Fund has a gain, the full margin amount and the amount of the gain are paid to the Fund.
Central clearing is designed to reduce counterparty credit risk and increase liquidity
compared to uncleared swaps because central clearing interposes the central clearinghouse as the
counterparty to each participant’s swap, but it does not eliminate those risks completely. There is also a risk of loss by a Fund of the initial and variation margin deposits in the event of bankruptcy or insolvency
of the FCM through which the Fund holds an open position, or the clearinghouse in a swap contract. The assets of
a Fund may not be fully protected in the event of the bankruptcy or insolvency of the FCM or clearinghouse
because the Fund might be limited to recovering only a pro rata share of all available funds and margin segregated
on behalf of an
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FCM’s customers. If the FCM does not provide accurate reporting, a Fund is also subject to the risk that the FCM could use the Fund’s assets to satisfy its own financial obligations or the payment obligations of another customer to the clearinghouse. Credit risk of cleared swap participants is concentrated
in a few clearinghouses, and the consequences of insolvency of a clearinghouse are not clear.
With cleared swaps, a Fund may not be able to obtain terms as favorable as it would
be able to negotiate for a bilateral, uncleared swap. In addition, an FCM may unilaterally amend the terms
of its agreement with a Fund, which may include the imposition of position limits or additional margin requirements
with respect to the Fund’s investment in certain types of swaps. Clearinghouses and FCMs can require termination of existing cleared swap transactions upon the occurrence of certain events, and can also require
increases in margin above the margin that is required at the initiation of the swap agreement.
Finally, a Fund is subject to the risk that, after entering into a cleared swap with
an executing broker, no FCM or clearinghouse is willing or able to clear the transaction. In such an event,
the Fund may be required to break the trade and make an early termination payment to the executing broker.
Commonly used swap agreements include:
Credit Default Swaps (CDS): A CDS is an agreement between two parties where the first party agrees to make one or more payments to the second party, while the second party assumes the
risk of certain defaults, generally a failure to pay or bankruptcy of the issuer on a referenced debt obligation.
CDS transactions are typically individually negotiated and structured. A Fund may enter into CDS to create
long or short exposure to domestic or foreign corporate debt securities or sovereign debt securities.
A Fund may buy a CDS (buy credit protection). In this transaction the Fund makes a
stream of payments based on a fixed interest rate (the premium) over the life of the swap in exchange
for a counterparty (the seller) taking on the risk of default of a referenced debt obligation (the Reference
Obligation). If a credit event occurs for the Reference Obligation, the Fund would cease making premium payments
and it would deliver defaulted bonds to the seller. In return, the seller would pay the notional value
of the Reference Obligation to the Fund. Alternatively, the two counterparties may agree to cash settlement in which
the seller delivers to the Fund (buyer) the difference between the market value and the notional value of the
Reference Obligation. If no event of default occurs, the Fund pays the fixed premium to the seller for the
life of the contract, and no other exchange occurs.
Alternatively, a Fund may sell a CDS (sell credit protection). In this transaction
the Fund will receive premium payments from the buyer in exchange for taking the risk of default of the
Reference Obligation. If a credit event occurs for the Reference Obligation, the buyer would cease to make premium
payments to the Fund and deliver the Reference Obligation to the Fund. In return, the Fund would pay
the notional value of the Reference Obligation to the buyer. Alternatively, the two counterparties may agree
to cash settlement in which the Fund would pay the buyer the difference between the market value and the notional
value of the Reference Obligation. If no event of default occurs, the Fund receives the premium
payments over the life of the contract, and no other exchange occurs.
Credit Default Index Swaps (CDX): A CDX is a swap on an index of CDS. A CDX allows an investor to manage credit risk or to take a position on a basket of credit entities (such as CDS
or CMBS) in a more efficient manner than transacting in single name CDS. If a credit event occurs in
one of the underlying companies, the protection is paid out via the delivery of the defaulted bond by the
buyer of protection in return for payment of the notional value of the defaulted bond by the seller of protection
or it may be settled through a cash settlement between the two parties. The underlying company is then removed
from the index. New series of CDX are issued on a regular basis. A Commercial Mortgage-Backed Index (CMBX)
is a type of CDX made up of 25 tranches of commercial mortgage-backed securities (See “Debt Instruments — Mortgage-Backed and Asset-Backed Securities”) rather than CDS. Unlike other CDX contracts where credit events are intended to capture an event of default, CMBX involves a pay-as-you-go (PAUG) settlement
process designed to capture non-default events that affect the cash flow of the reference obligation.
PAUG involves ongoing, two-way payments over the life of a contract between the buyer and the seller of protection
and is designed to closely mirror the cash flow of a portfolio of cash commercial mortgage-backed securities.
A CDX index
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tranche provides access to customized risk, exposing each investor to losses at different
levels of subordination. The lowest part of the capital structure is called the “equity tranche” as it has exposure to the first losses experienced in the basket. The mezzanine and senior tranches are higher
in the capital structure but can also be exposed to loss in value. Investments are subject to liquidity risks
as well as other risks associated with investments in credit default swaps.
Foreign Exchange Swaps: A foreign exchange swap involves an agreement between two parties to exchange two different currencies on a specific date at a fixed rate, and an agreement
for the reverse exchange of those two currencies at a later date and at a fixed rate. Foreign exchange
swaps were exempted from the definition of “swaps” by the U.S. Treasury and are therefore not subject to many rules under the CEA that apply to swaps, including the mandatory clearing requirement. They are also not considered “commodity interests” for purposes of CEA Regulations and Exclusions, discussed above. However, foreign exchange swaps nevertheless remain subject to the CFTC’s trade reporting requirements, enhanced anti-evasion authority, and strengthened business conduct standards.
Currency Swaps: A currency swap is an agreement between two parties to exchange periodic cash flows
on a notional amount of two or more currencies based on the relative value differential
between them. Currency swaps typically involve the delivery of the entire notional values of the
two designated currencies. In such a situation, the full notional value of a currency swap is subject to the risk
that the other party to the swap will default on its contractual delivery obligations. A Fund may also enter into
currency swaps on a net basis, which means the two different currency payment streams under the swap agreement
are converted and netted out to a single cash payment in just one of the currencies.
Because currency control is of great importance to the issuing governments and influences
economic planning and policy, purchases and sales of currency and related instruments can be
negatively affected by government exchange controls, blockages, and manipulations or exchange restrictions
imposed by governments. These actions could result in losses to a Fund if it is unable to deliver
or receive a specified currency or funds in settlement of obligations, including swap transaction obligations.
These actions could also have an adverse effect on a Fund’s swap transactions or cause a Fund’s hedging positions to be rendered useless, resulting in full currency exposure as well as incurring unnecessary
transaction costs.
Interest Rate Swaps: An agreement between two parties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified principal or notional
amount. In other words, Party A agrees to pay Party B a fixed interest rate multiplied by a notional
amount and in return Party B agrees to pay Party A a variable interest rate multiplied by the same notional amount.
Commodity Swaps: A commodity swap agreement is a contract in which one party agrees to make periodic payments to another party based on the change in market value of a commodity-based
underlying instrument (such as a specific commodity or commodity index) in return for periodic
payments based on a fixed or variable interest rate or the total return from another commodity-based underlying
instrument. In a total return commodity swap, a Fund receives the price appreciation of a commodity
index, a portion of a commodity index or a single commodity in exchange for paying an agreed-upon fee.
Total Return Swaps: An agreement in which one party makes payments based on a set rate, either fixed
or variable, while the other party makes payments based on the return of an underlying
asset, which includes both the income it generates and any capital gains.
Volatility and Variance Swaps: A volatility swap involves an exchange between a Fund and a counterparty of periodic payments based on the measured volatility of an underlying security, currency,
commodity, interest rate, index or other reference asset over a specified time frame. Depending on the
structure of the swap, either the Fund’s or the counterparty’s payment obligation will typically be based on the realized volatility of the reference asset as measured by changes in its price or level over a specified
time period while the other party’s payment obligation will be based on a specified rate representing expected volatility for the reference asset at the time the swap is executed, or the measured volatility of a different
reference asset over a specified time period. The Fund will typically make or lose money on a volatility
swap depending on the magnitude of the reference asset’s volatility, or size of the movements in its price, over a specified time
71
period, rather than general increases or decreases in the price of the reference asset.
Volatility swaps are often used to speculate on future volatility levels, to trade the spread between realized
and expected volatility, or to decrease the volatility exposure of other investments held by the Fund. Variance
swaps are similar to volatility swaps except payments are based on the difference between the implied and
measured volatility mathematically squared.
Inflation Swaps: Inflation swap agreements are contracts in which one party agrees to pay the cumulative
percentage increase in a price index, such as the Consumer Price Index, over the term
of the swap (with some lag on the referenced inflation index), and the other party pays a compounded
fixed rate. Inflation swap agreements may be used to protect the net asset value of a Fund against an unexpected
change in the rate of inflation measured by an inflation index. The value of inflation swap agreements
is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship
between nominal interest rates and the rate of inflation.
Swaptions: An option on a swap agreement, also called 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. A payer swaption gives the owner the right to pay 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.
Swaptions are considered to be swaps for purposes of CFTC regulation. Although they
are currently traded OTC, the CFTC may in the future designate certain options on swaps as subject
to mandatory clearing and exchange trading.
Bundled Securities. Bundled Securities are typically represented by certificates and the Funds will be
permitted at any time to exchange such certificates for the underlying securities
evidenced by such certificates and thus the certificates are generally subject to the same risks as the underlying
securities held in the trust. The Fund will examine the characteristics of the underlying securities for compliance
with investment criteria but will determine liquidity with reference to the certificates itself. TRAINS and
other trust certificates are generally not registered under the 1933 Act or the 1940 Act and therefore must be
held by qualified purchasers and resold to qualified institutional buyers pursuant to Rule 144A under
the 1933 Act. Investments in certain TRAINS or other trust certificates may have the effect of increasing the
level of Fund illiquidity to the extent the Fund, at a particular point in time, may be unable to find qualified institutional
buyers interested in purchasing such securities.
Options. All Funds except Invesco Government Money Market Fund and Invesco U.S. Government
Money Portfolio may invest in options. An option is a contract that gives the purchaser of the option, in return for the premium paid, the right, but not the obligation, to
buy from (in the case of a call) or sell to (in the case of a put) the writer of the option at the exercise price during the term of the
option (for American style options) or on a specified date (for European style options), the security, currency or other instrument underlying
the option (or delivery of a cash settlement price, in the case of certain options, such as an index option and other cash-settled options).
An option on a CDS or a futures contract (described below) gives the purchaser the right, but not the obligation, to enter into a CDS
or assume a position in a futures contract. Option transactions present the possibility of large amounts of exposure (or leverage), which
may result in a Fund’s net asset value being more sensitive to changes in the value of the option.
The value of an option position will reflect, among other things, the current market
value of the underlying investment, the time remaining until expiration, the relationship of the exercise
price to the market price of the underlying investment, the price volatility of the underlying investment and general
market and interest rate conditions.
A Fund will not write (sell) options if, immediately after such sale, the aggregate
value of securities or obligations underlying the outstanding options would exceed 20% of the Fund’s total assets. A Fund will not
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purchase options if, immediately after such purchase, the aggregate premiums paid
for outstanding options would exceed 5% of the Fund’s total assets.
A Fund may effectively terminate its right or obligation under an option by entering
into an offsetting closing transaction. For example, a Fund may terminate its obligation under a call
or put option that it had written by purchasing an identical call or put option, which is known as a closing
purchase transaction. Conversely, a Fund may terminate a position in a put or call option it had purchased
by writing an identical put or call option, which is known as a closing sale transaction. Closing transactions
permit a Fund to realize profits or limit losses on an option position prior to its exercise or expiration.
Options may be either listed on an exchange or traded in OTC markets. Listed options
are tri-party contracts (i.e., performance of the obligations of the purchaser and seller are guaranteed
by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration dates and differ from exchange-traded
options in that OTC options are transacted with dealers directly and not through a clearing corporation
(which guarantees performance). In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time; therefore the Fund may be required
to treat some or all OTC options as illiquid investments. Although a Fund will enter into OTC options only
with dealers that are expected to be capable of entering into closing transactions with it, there is no
assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to exercise
or expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option
position at any time prior to its expiration.
Types of Options:
Put Options on Securities. A put option gives the purchaser the right to sell, to the writer, the underlying
security, contract or foreign currency at the stated exercise price at any time prior
to the expiration date of the option (for American style options) or on a specified date (for European style options),
regardless of the market price or exchange rate of the security, contract or foreign currency, as the
case may be, at the time of exercise. If the purchaser exercises the put option, the writer of a put option is
obligated to buy the underlying security, contract or foreign currency for the exercise price.
Call Options on Securities. A call option gives the purchaser the right to buy, from the writer, the underlying security, contract or foreign currency at the stated exercise price at
any time prior to the expiration of the option (for American style options) or on a specified date (for European style
options), regardless of the market price or exchange rate of the security, contract or foreign currency, as the
case may be, at the time of exercise. If the purchaser exercises the call option, the writer of a call option
is obligated to sell to and deliver the underlying security, contract or foreign currency to the purchaser of the call
option for the exercise price.
Index Options. Index options (or options on securities indices) give the option buyer the right
to receive, upon exercise, a cash settlement amount instead of the securities included in the
relevant index, if the closing level of the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal
to the difference between the closing price of the index on the relevant option expiration date and the exercise
price of the call or put times a specified multiple (the multiplier), which determines the total dollar value
for each point of such difference.
The risks of investment in index options may be greater than options on securities,
especially if a Fund writes index call options. Because index options are settled in cash, when a Fund
writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and
holding the underlying securities. A Fund can offset some of the risk of writing an index call option by
holding a diversified portfolio of securities similar to those included in the underlying index. However, the Fund cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same securities in the index and,
as a result, bears the risk that the value of the securities held will not be perfectly correlated with the value
of the index.
CDS Options. A CDS option transaction gives the buyer the right, but not the obligation, to enter
into a CDS at a specified future date and under specified terms in exchange for paying a
market based purchase
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price or premium. The writer of the option bears the risk of any unfavorable move
in the value of the CDS relative to the market value on the exercise date, while the purchaser may allow the
option to expire unexercised.
Options on Futures Contracts. Options on futures contracts give the holder the right to assume a position in a futures contract (to buy the futures contract if the option is a call and to
sell the futures contract if the option is a put) at a specified exercise price at any time during the period of the
option.
Option Techniques:
Writing Options. A Fund may write options to generate additional income. As the writer of an option,
the Fund may have no control over when the underlying reference asset must be sold (in
the case of a call option) or purchased (in the case of a put option), if the option was structured as
an American style option, because the option purchaser may notify the Fund of exercise at any time prior to
the expiration of the option. In addition, if the option is cash-settled instead of deliverable, the Fund is obligated
to pay the option purchaser the difference between the exercise price and the value of the underlying
reference asset, instead of selling or purchasing the underlying reference asset, if the option is exercised.
In general, options are rarely exercised prior to expiration. Whether or not an option expires unexercised, the writer
retains the amount of the premium.
A Fund would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the price it is willing to pay for the underlying reference asset. In return
for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying reference
asset will decline below the exercise price, in which case the put option may be exercised and the Fund
may suffer a loss.
In return for the premium received for writing a call option on a reference asset,
the Fund foregoes the opportunity for profit from a price increase in the underlying reference asset above
the exercise price so long as the option remains open, but retains the risk of loss should the price of the reference
asset decline.
If an option that a Fund has written expires, the Fund will realize a gain in the
amount of the premium; however, such gain may be offset by a decline in the market value of the underlying
reference asset, held by the Fund during the option period. If a call option is exercised, a Fund will realize
a gain or loss from the sale of the underlying reference asset, which will be increased or offset by the premium
received. The obligation imposed upon the writer of an option is terminated upon the expiration of the option,
or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or
call as the case may be) identical to that previously sold. However, once a Fund has received an exercise notice,
it cannot effect a closing purchase transaction in order to terminate its obligation under the option
and must deliver (for a call) or purchase (for a put) the underlying reference asset at the exercise price (if deliverable)
or pay the difference between the exercise price and the value of the underlying reference asset
(if cash-settled).
Purchasing Options. A Fund may purchase a put option on an underlying reference asset owned by the Fund in order to protect against an anticipated decline in the value of the underlying
reference asset held by the Fund; may purchase put options on underlying reference assets against which it
has written other put options; or may speculate on the value of an underlying reference asset, index or
quantitative measure. The premium paid for the put option and any transaction costs would reduce any profit
realized when the underlying reference asset is delivered upon the exercise of the put option. Conversely,
if the underlying reference asset does not decline in value, the option may expire worthless and the
premium paid for the protective put would be lost. A put option may also be purchased on an investment
the Fund does not own.
A Fund may purchase a call option for the purpose of acquiring the underlying reference
asset for its portfolio, or on underlying reference assets against which it has written other call
options. The Fund is not required to own the underlying reference asset in order to purchase a call option.
If the Fund does not own the underlying position, the purchase of a call option would enable a Fund to acquire
the underlying reference asset at the exercise price of the call option plus the premium paid. So long as it
holds a call option, rather than the underlying reference asset itself, the Fund is partially protected from any
unexpected increase in the market price of the underlying reference asset. If the market price does not exceed
the exercise price, the
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Fund could purchase the underlying reference asset on the open market and could allow
the call option to expire, incurring a loss only to the extent of the premium paid for the option.
Straddles/Spreads/Collars. Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may for hedging purposes, or for speculative purposes,
enter into straddles, spreads or collars to adjust the risk and return characteristics of the Fund’s overall position.
Spread and straddle options transactions. In “spread” transactions, a Fund buys and writes a put or buys and writes a call on the same underlying instrument with the options having different
exercise prices, expiration dates, or both. In “straddles,” a Fund purchases a put option and a call option or writes a put option and a call option on the same instrument with the same expiration date and typically
the same exercise price. When a Fund engages in spread and straddle transactions, it seeks to profit from differences
in the option premiums paid and received and in the market prices of the related options positions
when they are closed out or sold. Because these transactions require the Fund to buy and/or write more
than one option simultaneously, the Fund’s ability to enter into such transactions and to liquidate its positions when necessary or deemed advisable may be more limited than if the Fund were to buy or sell a single
option. Similarly, costs incurred by the Fund in connection with these transactions will in many cases be greater
than if the Fund were to buy or sell a single option.
Option Collars. A Fund also may use option “collars.” A “collar” position combines a put option purchased by the Fund (the right of the Fund to sell a specific security within a specified
period) with a call option that is written by the Fund (the right of the counterparty to buy the same security) in a single instrument. The Fund’s right to sell the security is typically set at a price that is below the counterparty’s right to buy the security. Thus, the combined position “collars” the performance of the underlying security, providing protection from depreciation below the price specified in the put option, and allowing for participation
in any appreciation up to the price specified by the call option.
Rights and Warrants. Rights are equity securities representing a preemptive right of stockholders to purchase additional shares of a stock at the time of a new issuance, before the stock
is offered to the general public. A stockholder who purchases rights may be able to retain the same ownership
percentage after the new stock offering. A right usually enables the stockholder to purchase common stock
at a price below the initial offering price. A Fund that purchases a right takes the risk that the right
might expire worthless because the market value of the common stock falls below the price fixed by the right.
Each Fund other than Invesco Government Money Market Fund, Invesco Income Fund and
Invesco U.S. Government Money Portfolio may purchase warrants. A warrant gives the holder the right
to purchase securities from the issuer at a specific price within a certain time frame and is
similar to a call option. The main difference between warrants and call options is that warrants are issued by the company
that will issue the underlying security, whereas options are not issued by the company. Young, unseasoned
companies often issue warrants to finance their operations.
Futures Contracts. Each Fund except Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio may enter into futures contracts.
A futures contract is a standardized agreement to buy or sell a specified amount of
a specified security, currency, commodity, interest rate or index (or deliver a cash settlement price, in
the case of certain futures such as an index future, interest rate future or volatility future) for a specified
price at a designated future date, time and place. A “sale” of a futures contract means the acquisition of a contractual obligation to deliver the underlying instrument or asset called for by the contract at a specified price on a specified date. A “purchase” of a futures contract means the acquisition of a contractual obligation to acquire
the underlying instrument or asset called for by the contract at a specified price on a specified date. Futures
contracts are generally bought and sold on futures exchanges referred to as designated contract markets and are held
through a broker, known as a futures commission merchant (FCM), that is a member of the designated contract
market and its related clearinghouse. The designated contract market sets the specifications of the
relevant futures contract, including the date, time and place of delivery or settlement of the contract and the
quantity of the underlying instrument or asset per contract.
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The Fund will only enter into futures contracts that are traded (either domestically
or internationally) on futures exchanges or certain exempt markets including exempt boards of trade and electronic
trading facilities; and are standardized as to maturity date and underlying instrument or
asset. Futures exchanges and trading thereon in the United States are regulated under the CEA by the CFTC. Foreign
futures exchanges or exempt markets and trading thereon are not regulated by the CFTC and may not be subject
to the same regulatory controls. In addition, futures contracts that are traded on non-U.S. exchanges
or exempt markets may not be as liquid as those purchased on CFTC-designated contract markets. For a
further discussion of the risks associated with investments in foreign securities, see “Foreign Investments” above.
Brokerage fees are incurred when a futures contract is bought or sold, and margin
deposits must be maintained at all times when a futures contract is outstanding. “Margin” for a futures contract is the amount of funds that must be deposited by a Fund with the applicable FCM in order to initiate
trading in the futures contract and maintain its open positions in futures contract. A margin deposit made
when the futures contract is entered (initial margin) is intended to ensure the Fund’s performance under the futures contract. The initial margin required for a particular futures contract is set by the exchange on which
the futures contract is traded and may be significantly modified from time to time by the exchange or the FCM during
the term of the futures contract.
Subsequent payments, called “variation margin,” received from or paid to the FCM through which a Fund holds the futures contract will be made on a daily basis as the futures contract price
fluctuates making the futures contract more or less valuable, a process known as marking-to-market. When
the futures contract is closed out, if the Fund has a loss equal to or greater than the margin amount, the
margin amount is paid to the FCM along with any loss in excess of the margin amount. If the Fund has a loss
of less than the margin amount, the excess margin is returned to the Fund. If the Fund has a gain, the full
margin amount and the amount of the gain are paid to the Fund and the FCM pays the Fund any excess gain
over the margin amount.
There is a risk of loss by a Fund of the initial and variation margin deposits in
the event of bankruptcy or insolvency of the FCM with which the Fund has an open position in a futures contract.
The assets of a Fund may not be fully protected in the event of the bankruptcy or insolvency of the FCM
or clearinghouse because the Fund might be limited to recovering only a pro rata share of all available funds
and margin segregated on behalf of an FCM’s customers. If the FCM does not provide accurate reporting, a Fund is also subject to the risk that the FCM could use the Fund’s assets, which are held in an omnibus account with assets belonging to the FCM’s other customers, to satisfy its own financial obligations or the payment obligations of another customer to the clearinghouse.
Closing out an open futures contract is effected by entering into an offsetting futures
contract for the same aggregate amount of the identical underlying instrument or asset and the same delivery
or settlement date. There can be no assurance, however, that a Fund will be able to enter into an offsetting
contract with respect to a particular futures contract at a particular time. If a Fund is not able to enter
into an offsetting contract, it will continue to be required to maintain the margin deposits on the futures contract.
In addition, if a Fund were unable to liquidate a futures contract or an option on
a futures contract position due to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position.
In addition, except in the case of purchased options, the Fund would continue to be required to make daily
variation margin payments.
Pursuant to federal securities laws and regulations, a Fund's use of futures contracts
may require the Fund to set aside assets to reduce the risks associated with using futures contracts.
This process is described in more detail above in the section "Derivatives."
Types of Futures Contracts:
Commodity Futures: A commodity futures contract is an exchange-traded contract to buy or sell a particular commodity at a specified price at some time in the future. Commodity futures
contracts are highly
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volatile; therefore, the prices of a Fund’s shares may be subject to greater volatility to the extent it invests in commodity futures.
Currency Futures: A currency futures contract is a standardized, exchange-traded contract to buy or
sell a particular currency at a specified price at a future date (commonly three months or
more). Currency futures contracts may be highly volatile and thus result in substantial gains or losses to
the Fund.
A Fund may either exchange the currencies specified at the maturity of a currency
futures contract or, prior to maturity, enter into a closing transaction involving the purchase or sale
of an offsetting contract. A Fund may also enter into currency futures 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. Closing transactions with respect to currency futures contracts are usually effected with
the counterparty to the original currency futures contract.
Index Futures: An index futures contract is an exchange-traded contract that provides for the delivery,
at a designated date, time and place, of an amount of cash equal to a specified dollar
amount times the difference between the index value at the close of trading on the date specified in the contract
and the price agreed upon in the futures contract; no physical delivery of securities comprising the index
is made. Index futures can be based on stock, bond or other indices. Such indices cannot be purchased or sold
directly.
Interest Rate Futures: An interest rate futures contract is an exchange-traded contract in which the specified underlying security is either an interest-bearing fixed income security
or an inter-bank deposit. Two examples of common interest rate futures contracts are U.S. Treasury futures and SOFR futures contracts. The specified security for U.S. Treasury futures is a U.S. Treasury security. The
specified security for SOFR futures is the Secured Overnight Financing Rate (SOFR), which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
Dividend Futures: A dividend futures contract is an exchange-traded contract to purchase or sell an
amount equal to the total dividends paid by a selected security, basket of securities
or index, over a period of time for a specified price that is based on the expected dividend payments from the
selected security, basket of securities or index.
Security Futures: A security futures contract is an exchange-traded contract to purchase or sell, in
the future, a specified quantity of a security (other than a Treasury security), or a
narrow-based securities index at a certain price.
Options on Futures Contracts. Options on futures contracts are similar to options on securities or currencies except that options on futures contracts give the purchaser the right,
in return for the premium paid, to assume a position in a futures contract (a long position if the option is
a call and a short position if the option is a put) at a specified exercise price at any time during the period of the
option. Upon exercise of the option, the delivery of the futures contract position by the writer of the option
to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures contract margin account.
Forward Foreign Currency Contracts. Certain Funds may enter into forward foreign currency contracts to hedge against adverse movements in the foreign currencies in which portfolio securities
are denominated. Certain Funds may also enter into forward foreign currency transactions for speculative
purposes, including to seek additional income or increased returns for the Fund.
A forward foreign currency contract is an obligation to buy or sell a particular currency
in exchange for another currency, which may be U.S. dollars, at a specified exchange rate on a future
date. Forward foreign currency contracts are typically individually negotiated and privately traded by currency
traders and their customers in the interbank market. A Fund may enter into forward foreign currency
contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions
generally.
At the maturity of a forward foreign currency contract, a Fund may either exchange
the currencies specified at the maturity of the contract or, prior to maturity, a Fund may enter
into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with
respect to forward foreign
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currency contracts may or may not be effected with the counterparty to the original
forward contract. A Fund may also enter into forward foreign currency contracts that do not provide for physical
exchange of the two currencies on the settlement date but instead provide for settlement 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).
Under definitions adopted by the CFTC and SEC, non-deliverable forwards are considered
swaps, and therefore are included in the definition of “commodity interests.” Although non-deliverable forwards have historically been traded in the OTC market, as swaps they may in the future be required
to be centrally cleared and traded on public execution facilities. For more information on central
clearing and trading of cleared swaps, see “Swaps” and “Special Regulatory Risks of Derivatives.” Forward foreign currency contracts that qualify as deliverable forwards are not regulated as swaps for most
purposes, and are not included in the definition of “commodity interests.” However these forwards are subject to some requirements applicable to swaps, including reporting to swap data repositories, documentation
requirements, and business conduct rules applicable to swap dealers. CFTC regulation of forward foreign currency
contracts, especially non-deliverable forwards, may restrict a Fund’s ability to use these instruments in the manner described above or subject Invesco to CFTC registration and regulation as a CPO.
The cost to a Fund of engaging in forward foreign currency contracts varies with factors
such as the currencies involved, the length of the contract period, differences in prevailing
interest rates in the jurisdictions associated with the two currencies and the prevailing market conditions. Because forward
foreign currency contracts are usually entered into on a principal basis, no fees or commissions are
typically involved. The use of forward foreign currency contracts for hedging does not eliminate fluctuations
in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange
in advance. While forward foreign currency contract sales limit the risk of loss due to a decline in
the value of the hedged currencies, they also limit any potential gain that might result should the value
of the currencies increase.
LIBOR Transition Risk
A Fund may have investments in financial instruments that recently transitioned from, or continue to be tied to, the London Interbank Offered Rate (LIBOR) as the reference or benchmark rate for
variable interest rate calculations (including variable or floating rate debt securities or loans and
derivatives such as interest rate futures or swaps). LIBOR was a common benchmark interest rate index historically used to make adjustments to variable-rate debt instruments, to determine interest rates for a variety
of financial instruments and borrowing arrangements and as a reference rate in derivative contracts.
The UK Financial Conduct Authority (FCA), the regulator that oversees LIBOR, has ceased publishing the majority of LIBOR rates. In April 2023, the FCA announced that some USD LIBOR settings will continue to be published under a synthetic methodology until September 30, 2024 for certain legacy contracts, but any such rates are considered non-representative of the underlying market. Regulators and financial industry working groups have worked to identify alternative reference rates (ARRs) to replace LIBOR and to assist with
the transition to the new ARRs. Under U.S. regulations that implement a statutory fallback mechanism to replace LIBOR, benchmark rates based on the Secured Overnight Financing Rate (“SOFR”) have replaced LIBOR in certain financial contracts. SOFR is a broad measure of the cost of overnight borrowing of cash through repurchase agreements collateralized by U.S. Treasury securities.
While the transition process away from LIBOR has become increasingly well-defined,
there remains uncertainty and risks relating to converting certain longer-term securities and transactions to a new ARR. For example, there can be no assurance that the composition or characteristics of any
ARRs or financial instruments in which a Fund invests that utilize ARRs will be similar to or produce
the same value or economic equivalence as LIBOR or that these instruments will have the same volume
or liquidity. Additionally, while some legacy USD LIBOR instruments may provide for an alternative or fallback rate-setting methodology, there may be significant uncertainty regarding the effectiveness of such
methodologies to replicate USD LIBOR; other legacy USD LIBOR instruments may not include such fallback rate-setting provisions at all or may not be able to rely on the statutory fallback mechanism, the effectiveness of which is
78
also uncertain. There also remains significant uncertainty regarding the effectiveness of the Adjustable Interest Rate Act legislation. While it is expected that the market participants will amend legacy financial instruments referencing LIBOR to include such fallback provisions to ARRs, there remains uncertainty regarding the willingness and ability of parties to add or amend such fallback provisions in legacy instruments. Moreover, certain aspects of the transition from LIBOR will rely on the actions of third-party market participants, such as clearing houses, trustees, administrative agents, asset servicers and certain service providers; the Adviser cannot guarantee the performance of such market participants and any failure
on the part of such market participants to manage their part of the LIBOR transition could
impact a Fund. The Funds may have instruments linked to other interbank offered rates that may also cease to
be published in the future. All of the foregoing may adversely affect a Fund’s performance or NAV.
Environmental, Social and Governance (ESG) Considerations
The ESG considerations described herein may not be used by a Fund and will vary depending
on a Fund's particular investment strategy and in accordance with what a Fund’s investment team deems relevant when making investment decisions. The ESG considerations described herein may not
be applied or evaluated with respect to each issuer or Fund investment. Further, a Fund’s prospectus may describe additional ESG strategies and risks.
ESG considerations, either quantitative or qualitative, may be utilized as a component
of a Fund's investment process to implement its investment strategy in pursuit of its investment
objective. ESG factors may be incorporated to evaluate an issuer, as part of risk analysis, credit analysis
or in other manners. ESG factors may vary across types of investments and issuers, and not every ESG factor
may be identified or evaluated. The incorporation of ESG factors may affect a Fund’s exposure to certain issuers or industries and may not work as intended. A Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different methodology to identify
and/or incorporate ESG factors. Because ESG considerations may be used as one part of an overall investment
process, a Fund may still invest in securities of issuers that are not considered ESG-focused or that
may be viewed as having a high ESG risk profile. As investors can differ in their views regarding ESG factors,
a Fund may invest in issuers that do not reflect the views with respect to ESG of any particular investor.
Information used by a Fund to evaluate such factors, including information from reliance on third-party research
and/or proprietary research, may not be readily available, complete or accurate, and may vary across
providers and issuers as ESG is not a uniformly defined characteristic, which could negatively impact a Fund’s ability to accurately assess an issuer, which could negatively impact a Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to a Fund’s performance.
Receipt of Issuer’s Nonpublic Information
The Adviser or Sub-Advisers (through their portfolio managers, analysts, or other
representatives) may receive material nonpublic information about an issuer that may restrict the ability
of the Adviser or Sub-Advisers to cause the Funds to buy or sell securities of the issuer on behalf of the Funds
for substantial periods of time. This may impact the Funds' ability to realize profit or avoid loss
with respect to the issuer and may adversely affect the Funds' flexibility with respect to buying or selling securities,
potentially impacting Fund performance. For example, activist investors of certain issuers in which the
Adviser or Sub-Advisers hold large positions may contact representatives of the Adviser or Sub-Advisers and
may disclose material nonpublic information in such communication. The Adviser or Sub-Advisers would be
restricted from trading on the basis of such material nonpublic information, limiting their flexibility in
managing the Funds and possibly impacting Fund performance.
Business Continuity and Operational Risk
The Adviser, the Funds and the Funds’ service providers may experience disruptions or operating errors, such as processing errors or human errors, inadequate or failed internal or external
processes, systems or technology failures, or other disruptive events, that could negatively impact and
cause disruptions in normal business operations of the Adviser, the Funds or the Funds’ service providers. The Adviser has developed a Business Continuity Program (the “Program”) designed to minimize the disruption of normal business
79
operations in the event of an adverse incident affecting the Funds, the Adviser and/or
its affiliates. The Program is also designed to enable the Adviser to reestablish normal business operations
in a timely manner during such an adverse incident; however, there are inherent limitations in such programs
(including the possibility that contingencies have not been anticipated and procedures do not work
as intended) and, under some circumstances (e.g. natural disasters, terrorism, public health crises, power
or utility shortages and failures, system failures or malfunctions), the Adviser, its affiliates, and any service
providers or vendors used by the Adviser, its affiliates, or the Fund could be prevented or hindered from providing
services to the Funds for extended periods of time. These circumstances could cause disruptions and negatively impact the Funds’ service providers and the Funds’ business operations, potentially including an inability to process Fund shareholder transactions, an inability to calculate a Fund’s net asset value and price the Fund’s investments, and impediments to trading portfolio securities.
Cybersecurity Risk
With the increased use of technologies such as the Internet to conduct business, the
Funds, like all companies, may be susceptible to operational, information security and related risks.
Cybersecurity incidents involving the Funds and their service providers (including, without limitation, a Fund’s investment adviser, sub-adviser, fund accountant, custodian, transfer agent and financial intermediaries)
have the ability to cause disruptions and impact business operations, potentially resulting in financial losses,
impediments to trading, the inability of Fund shareholders to transact business, violations of applicable
privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs.
Cybersecurity incidents can result from deliberate cyberattacks or unintentional events
and may arise from external or internal sources. Cyberattacks may include infection by malicious
software or gaining unauthorized access to digital systems, networks or devices that are used to service
the Funds' operations (e.g., by “hacking” or “phishing”). Cyberattacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites
(i.e., efforts to make network services unavailable to intended users). These cyberattacks could cause the
misappropriation of assets or personal information, corruption of data or operational disruptions. Geopolitical
tensions may, from time to time, increase the scale and sophistication of deliberate cyberattacks.
Similar adverse consequences could result from cybersecurity incidents affecting issuers
of securities in which the Funds invest, counterparties with which the Funds engage, governmental and
other regulatory authorities, exchange and other financial market operators, banks, brokers, dealers,
insurance companies, other financial institutions and other parties. In addition, substantial costs may
be incurred in order to prevent any cybersecurity incidents in the future. Although the Funds’ service providers may have established business continuity plans and risk management systems to mitigate cybersecurity risks,
there can be no guarantee or assurance that such plans or systems will be effective, or that all risks
that exist, or may develop in the future, have been completely anticipated and identified or can be protected
against. The Funds and their shareholders could be negatively impacted as a result.
Natural Disaster/Epidemic Risk
Natural or environmental disasters such as earthquakes, wildfires, floods, hurricanes,
tsunamis, other severe weather-related phenomena, and widespread disease including pandemics and epidemics,
can be highly disruptive to economies and markets, sometimes severely so, and can adversely
impact individual companies, sectors, industries, markets, currencies, interest and inflation rates,
credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. Given the increasing interdependence among global economies and markets, conditions in one country, market,
or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange
rates in other countries, including the U.S. These disruptions could prevent the Funds from executing advantageous
investment decisions in a timely manner and negatively impact the Funds’ ability to achieve their investment objectives. Any such event(s) could have a significant adverse impact on the value and risk profile
of the Funds.
80
The recent spread of the human coronavirus disease 2019 (COVID-19) is an example.
In the first quarter of 2020, the World Health Organization (WHO) recognized COVID-19 as a global pandemic
and both the WHO and the U.S. declared the outbreak a public health emergency. The subsequent spread
of COVID-19 resulted in, among other significant adverse economic impacts, instances of market
closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to
contain the spread of COVID-19 resulted in travel restrictions, closed international borders, disruptions of healthcare
systems, business operations (including business closures) and supply chains, employee layoffs and general
lack of employee availability, lower consumer demand, and defaults and credit downgrades, all of which
contributed to disruption of global economic activity across many industries and exacerbated other
pre-existing political, social and economic risks domestically and globally. Although the WHO and the U.S.
ended their declarations of COVID-19 as a global health emergency in May 2023, the full economic impact at
the macro-level and on individual businesses, as well as the potential for a future reoccurrence of COVID
or the occurrence of a similar epidemic or pandemic, are unpredictable and could result in significant and
prolonged adverse impact on economies and financial markets in specific countries and worldwide and thereby
negatively affect a Fund’s performance.
Custody and Banking Risks
The Fund’s assets may be maintained with one or more banks or other depository institutions (“banking institutions”), including both US and non-US banking institutions. In addition, the Fund’s assets may be maintained at regional (or mid-size) banking institutions or large banking institutions.
Regional banking institutions are generally subject to fewer regulatory safeguards than large banking
institutions, causing regional banking institutions to be perceived as having greater credit risk than large
banking institutions. The Fund may enter into credit facilities or have other financial relationships with banking
institutions. The distress, impairment or failure of one or more banking institutions, whether or not holding the Fund’s assets, may inhibit the ability of the Fund to access depository accounts or lines of credit at all or
in a timely manner. Such events can be caused by various factors including negative market sentiment, significant
withdrawals, fraud, or poor management. In such cases, the Fund may need to delay or forgo making new investments,
or the Fund may need to sell another investment to raise cash when it is not desirable to do so, which
could result in lower performance. In the event of such a failure of a banking institution, access to such
accounts could be restricted and U.S. Federal Deposit Insurance Corporation (FDIC) protection may not
be available for balances in excess of the amounts insured by the FDIC (and similar considerations
may apply to banking institutions in other jurisdictions not subject to FDIC protection). In such instances,
the Fund may not recover such excess uninsured amounts and instead would only have an unsecured claim against
the banking institution and may be able to recover only the residual value of the banking institution’s assets, if any value is recovered at all. The loss of any assets maintained with a banking institution or
the inability to access such assets for a period of time, even if ultimately recovered, could be materially adverse
to the Fund. In addition, the Fund’s Adviser may not be able to identify all potential solvency or stress concerns with respect to a banking institution or transfer assets from one bank to another in a timely manner
in the event a banking institution comes under stress or fails. It is also possible that a Fund will incur
additional expenses or delays in putting in place alternative arrangements or that such alternative arrangements will
be less favorable than those formerly in place (with respect to access to capital, economic terms, or otherwise).
Litigation Risk
From time to time, a Fund may pursue or be involved as a named party in litigation arising in connection
with its role or status as a shareholder, bondholder, lender or holder of portfolio
investments, its own activities, or other circumstances. Litigation that affects a Fund’s portfolio investments may result in the reduced value of such investments or higher portfolio turnover if the Fund determines to sell such
investments. Litigation could result in significant expenses, reputational damage, increased insurance premiums,
adverse judgment liabilities, settlement liabilities, injunctions, diversions of Fund resources, disruptions
to Fund operations and/or other similar adverse consequences, any of which may increase the expenses
incurred by a Fund or adversely affect the value of the Fund’s shares.
81
Fund Policies
Fundamental Restrictions. Except as otherwise noted below, each Fund is subject to the following investment restrictions, which may be changed only by a vote of such Fund's outstanding
shares. Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or
more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will
not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified
company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules and regulations are amended from time to time or are interpreted from time to time
by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that
the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940
Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying
with this restriction, however, the Fund may purchase securities of other investment companies to the extent
permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted
by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction
does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale
of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter
under the 1933 Act.
(4) The Fund (except for Invesco Global Real Estate Fund, Invesco Real Estate Fund
and Invesco Income Fund) will not make investments that will result in the concentration (as that
term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its
investments in the securities of issuers primarily engaged in the same industry. This restriction does
not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities, (ii) tax-exempt obligations issued by governments or political
subdivisions of governments, or (iii) with respect to Invesco Government Money Market Fund and Invesco
U.S. Government Money Portfolio, bank instruments. In complying with this restriction,
the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
Invesco Global Real Estate Fund and Invesco Real Estate Fund will concentrate (as
that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) its investments
in the securities of domestic and foreign real estate and real estate-related companies.
For purposes of Invesco Global Real Estate Fund and Invesco Real Estate Fund's fundamental restriction
regarding industry concentration, real estate and real estate-related companies shall consist
of issuers that at least 50% of its assets, gross income or net profits are attributable to ownership, construction,
management, or sale of residential, commercial or industrial real estate. These issuers include
(i) REITs or other real estate operating companies that (a) own property, (b) make or invest in short-term
construction and development mortgage loans, or (c) invest in long-term mortgages or mortgage pools,
and (ii) issuers whose products and services are related to the real estate industry, such as manufacturers
and distributors of building supplies and financial institutions that issue or service
mortgages.
Invesco Income Fund will concentrate (as that term may be defined or interpreted by
the 1940 Act Laws, Interpretations and Exemptions) its investments in the real estate finance industry,
including, without limitation, investments in residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), real estate investment trusts (“REITs”), other real estate-related securities, loans and other instruments that are secured by, or otherwise have exposure
to, real estate.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a
result of ownership of securities or other instruments. This restriction does not prevent the Fund from
investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests
therein, or investing in securities that are secured by real estate or interests therein.
82
(6) The Fund (except for Invesco Global Real Estate Fund) may not purchase physical
commodities or sell physical commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the Fund from engaging in transactions involving
futures contracts and options thereon or investing in securities that are secured by physical commodities.
Invesco Global Real Estate Fund may not purchase or sell physical commodities except
to the extent permitted by the 1940 Act and any other governing statute, and by the rules thereunder,
and by the SEC or other regulatory agency with authority over the Fund.
(7) The Fund may not make personal loans or loans of its assets to persons who control
or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations
and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing
debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers
or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide each of the Funds with the ability
to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without
receiving prior shareholder approval of the change. Even though each of the Funds has this flexibility,
the Board has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions
which Invesco and, when applicable, the Sub-Advisers must follow in managing the Funds. Any changes to
these non-fundamental restrictions, which are set forth below, require the approval of the Board.
Explanatory Note
For purposes of the Fund’s fundamental restriction related to industry concentration above, investments in tax-exempt municipal securities where the payment of principal and interest for such
securities is derived solely from a specific project associated with an issuer that is not a governmental
entity or a political subdivision of a government are subject to a Fund’s industry concentration policy.
For purposes of the Fund’s fundamental restriction related to physical commodities above, the Fund is currently permitted to invest in futures, swaps and other instruments on physical
commodities to the extent permitted by the fundamental restriction and the 1940 Act does not prohibit a fund
from owning commodities or contracts related to commodities. The extent to which the Fund can invest in futures,
swaps and other instruments on physical commodities, and/or commodities or contracts related to commodities
is set out in the Fund’s prospectus, this SAI, and as permitted by the Fund’s fundamental restriction.
For purposes of the Fund’s fundamental restriction related to real estate above, the 1940 Act does not prohibit a fund from owning real estate. The extent to which the Fund can invest in
real estate is set out in the investment strategies described in the Fund’s prospectus or this SAI.
For purposes of the Fund’s fundamental restriction related to senior securities above, the 1940 Act prohibits a fund from issuing a “senior security,” which is generally defined as any bond, debenture, note, or similar obligation or instrument constituting a security and evidencing indebtedness,
or any stock of a class having priority over any other class of the fund’s shares with respect to the payment of dividends or the distribution of fund assets, except that the fund may borrow money as described above.
For purposes of the Fund’s fundamental restriction related to loans above made by the Fund, current SEC staff interpretations under the 1940 Act prohibit a fund from lending more than one-third
of its total assets, except through the purchase of debt obligations or the use of repurchase agreements.
Non-Fundamental Restrictions. Non-fundamental restrictions may be changed for any Fund without shareholder approval. The non-fundamental investment restrictions listed below apply
to each of the Funds unless otherwise indicated.
83
(1) In complying with the fundamental restriction regarding issuer diversification,
the Fund will not, with respect to 75% of its total assets (and for Invesco Government Money Market Fund and
Invesco U.S. Government Money Portfolio, with respect to 100% of their total assets), purchase
the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of
its agencies or instrumentalities and securities issued by other investment companies), if, as a result,
(i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, except,
in the case of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio,
as permitted by Rule 2a-7 under the 1940 Act, or (ii) the Fund would hold more than 10% of the
outstanding voting securities of that issuer. The Fund may purchase securities of other investment companies
as permitted by the 1940 Act Laws, Interpretations and Exemptions.
In complying with the fundamental restriction regarding issuer diversification, any
Fund that invests in municipal securities will regard each state (including the District of Columbia and
Puerto Rico), territory and possession of the United States, each political subdivision, agency, instrumentality
and authority thereof, and each multi-state agency of which a state is a member as a separate "issuer."
When the assets and revenues of an agency, authority, instrumentality or other political subdivision
are separate from the government creating the subdivision and the security is backed only by assets
and revenues of the subdivision, such subdivision would be deemed to be the sole issuer. Similarly,
in the case of an Industrial Development Bond or Private Activity Bond, if that bond is backed only
by the assets and revenues of the non-governmental user, then that non-governmental user would be deemed
to be the sole issuer. However, if the creating government or another entity guarantees a security,
then to the extent that the value of all securities issued or guaranteed by that government or
entity and owned by a Fund exceeds 10% of the Fund's total assets, the guarantee would be considered a separate
security and would be treated as issued by that government or entity. Securities issued or
guaranteed by a bank or subject to financial guaranty insurance are not subject to the limitations set
forth in the preceding sentence.
(2) In complying with the fundamental restriction regarding borrowing money and issuing
senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total
assets (including the amount borrowed) less liabilities (other than borrowings).
(3) In complying with the fundamental restriction regarding industry concentration,
the Fund (except for Invesco Global Real Estate Fund, Invesco Real Estate Fund and Invesco Income Fund)
may invest up to 25% of its total assets in the securities of issuers whose principal business activities
are in the same industry. Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio,
in complying with the fundamental restriction regarding industry concentration, may invest
up to 25% of their total assets in the securities of issuers whose principal business activities
are in the same industry and may invest over 25% of their assets in (i) obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities, (ii) tax-exempt obligations issued by governments
or political subdivisions of governments, and (iii) bank instruments. For purposes of Invesco Short
Duration Inflation Protected Fund's fundamental restriction regarding industry concentration, the United
States Government shall not be considered an industry.
(4) Notwithstanding the fundamental restriction with regard to engaging in transactions
involving futures contracts and options thereon or investing in securities that are secured by physical
commodities, the Fund (except for Invesco Global Real Estate Fund) currently may not invest in any
security (including futures contracts or options thereon) that is secured by physical commodities.
The Funds do not consider currencies or other financial commodities or contracts and
financial instruments to be physical commodities (which include, for example, oil, precious
metals and grains). Accordingly, the Funds will interpret the proposed fundamental restriction and the
related non-fundamental restriction to permit the Funds, subject to each Fund's investment objectives and
general investment policies (as stated in the Funds' prospectuses and herein), to invest directly
in foreign currencies and other financial commodities and to purchase, sell or enter into commodity
futures contracts and options thereon, forward foreign currency contracts, foreign currency
options, currency-,
84
commodity- and financial instrument-related swap agreements, hybrid instruments, interest
rate or securities-related or foreign currency-related hedging instruments or other currency-,
commodity- or financial instrument-related derivatives, subject to compliance with any applicable
provisions of the federal securities or commodities laws. The Funds will interpret fundamental restriction
regarding the purchase and sale of physical commodities and the related non-fundamental restriction
to permit the Funds to invest in ETFs, investment companies and other pooled investment vehicles
that invest in physical and/or financial commodities, subject to the limits described in the Funds'
prospectuses and herein.
(5) In complying with the fundamental restriction with regard to making loans, the
Fund may lend up to 33 1/3% of its total assets and may lend money to an Invesco Fund, on such terms and
conditions as the SEC may require in an exemptive order.
(6) Notwithstanding the fundamental restriction with regard to investing all assets
in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management
investment company with the same fundamental investment objectives, policies and restrictions
as the Fund.
(7) The Fund may not acquire any securities of registered open-end investment companies
or registered unit investment trusts in reliance on Sections 12(d)(1)(F) or 12(d)(1)(G) of the 1940
Act.
(8) The following apply:
(a) Invesco Corporate Bond Fund invests, under normal market conditions, at least
80% of its assets in corporate bonds.
(b) Invesco Global Real Estate Fund and Invesco Real Estate Fund each invest, under
normal circumstances, at least 80% of their assets in securities of real estate and real
estate-related issuers.
(c) Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
each invest, under normal circumstances, at least 80% of their assets in government securities
and/or repurchase agreements that are collateralized by government securities.
(d) Invesco High Yield Fund invests, under normal circumstances, at least 80% of its
assets in debt securities that are determined to be below investment grade quality.
(e) Invesco Intermediate Bond Factor Fund invests, under normal market conditions, at
least 80% of its assets (plus any borrowings for investment purposes) in debt securities.
(f) Invesco Short Duration Inflation Protected Fund invests, under normal circumstances,
at least 80% of its assets in the component securities of the ICE BofA 1-5 Year US Inflation-Linked
Treasury Index.
(g) Invesco Short Term Bond Fund invests, under normal circumstances, at least 80% of
its assets in fixed-income securities.
For purposes of the foregoing, "assets" means net assets, plus the amount of any borrowings
for investment purposes. Derivatives and other instruments that have economic characteristics
similar to the securities in a Fund’s 80% policy described above for a Fund may also be counted toward that Fund's 80% policy. The Fund will provide written notice to its shareholders prior to any change
to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
It is the intention of each Fund, unless otherwise indicated, that with respect to
the Fund's policies that are a result of application of law, the Fund will take advantage of the flexibility
provided by rules or interpretations of the SEC currently in existence or promulgated in the future, or
changes to such laws.
Portfolio Turnover
Each Fund calculates its portfolio turnover rate by dividing the value of the lesser
of purchases or sales of portfolio securities for the fiscal period by the monthly average of the value of
portfolio securities owned by the Fund during the fiscal period. A 100% portfolio turnover rate would occur, for example,
if all of the portfolio
85
securities (other than short-term securities) were replaced once during the fiscal
period. Portfolio turnover rates will vary from year to year, depending on market conditions. The following Fund
experienced significant variation in portfolio turnover during the two most recently completed fiscal years.
|
Fund
|
2024
|
2023
|
|
Invesco High Yield Fund1
|
148%
|
87%
|
1 The variation in portfolio turnover rate for the Fund was due to market conditions
and changes in Invesco's investment outlook.
Policies and Procedures for Disclosure of Fund Holdings
The Board has adopted policies and procedures with respect to the disclosure of the
Funds' portfolio holdings (the Holdings Disclosure Policy). Invesco and the Board may amend the Holdings
Disclosure Policy at any time without prior notice. Details of the Holdings Disclosure Policy and a
description of the basis on which employees of Invesco and its affiliates may release information about portfolio
securities in certain contexts are provided below. As used in the Holdings Disclosure Policy and throughout
the SAI, the term “portfolio holdings information” includes information with respect to the portfolio holdings of a Fund, including holdings that are derivatives and holdings held as short positions. Information generally
excluded from “portfolio holdings information” includes, without limitation, (i) descriptions of allocations among asset classes, regions, countries, industries or sectors; (ii) aggregated data such as average or
median ratios, market capitalization, credit quality or duration; (iii) performance attributions by asset
class, country, industry or sector; (iv) aggregated risk statistics, analysis and simulations, such as stress
testing; (v) the characteristics of the stock and bond components of a Fund’s portfolio holdings and other investment positions; (vi) the volatility characteristics of a Fund; (vii) information on how various weightings
and factors contributed to Fund performance; (viii) various financial characteristics of a Fund or its underlying
portfolio investments; and (ix) other information where, in the reasonable belief of the Funds' Chief Compliance Officer
(or a designee), the release of such information would not present risks of dilution, arbitrage, market
timing, insider trading or other inappropriate trading for the applicable Fund.
Public release of portfolio holdings. The Funds disclose the following portfolio holdings information at www.invesco.com/us.
All Funds (except for Invesco Government Money Market Fund and Invesco U.S. Government
Money Portfolio)1
|
Information
|
Approximate Date of Website Posting
|
Information Remains Posted
on Website
|
|
Select portfolio holdings information,
such as top ten holdings as of the
month-end
|
7 business days after month-end
|
Until replaced with the
following month’s top ten
holdings
|
|
|
|
|
|
Select portfolio holdings information
(e.g., buys/sells,
contributors/detractors and/or
relevant to market environment)
|
7 business days after month-end
|
Until replaced with the
following month’s select
portfolio holdings
information
|
|
|
|
|
|
Complete portfolio holdings
information as of calendar month-
end
|
10 business days after month-end
|
For 12 months from the
date of posting
|
|
|
|
|
|
Complete portfolio holdings
information as of fiscal quarter-end
|
60-70 calendar days after fiscal quarter-end
|
For 12 months from the
date of posting
|
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Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio2
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio make available
to beneficial owners of Fund shares and prospective investors information regarding
or derived from the Funds’ portfolio holdings.
|
Disclosure
|
Disclosure Date/Lag
|
Information Remains Posted
on Website
|
|
Weighted average maturity
information thirty-day, seven-day,
and one-day yield information, daily
dividend factor and total net assets
|
Next business day
|
Until posting of the
following business day's
information
|
|
|
|
|
|
With respect to the Fund and each
class of redeemable shares thereof:
|
Fifth business day of the month (as of the last business day or
subsequent calendar day of the preceding month).
|
Not less than six months
|
|
|
|
|
|
• The dollar-weighted average
portfolio maturity
|
|
|
|
• The dollar-weighted average
portfolio maturity determined without
reference to interest rate
readjustments
|
|
|
|
|
|
|
|
With respect to each security held
by the Fund:
|
|
|
|
|
|
|
|
• The name of the issuer
|
|
|
|
• The category of investment (as
such categories are provided in Rule
2a-7 and under Invesco’s
Procedures for Money Market Funds
Operating Under Rule 2a-7)
|
|
|
|
• CUSIP number
|
|
|
|
• Principal amount
|
|
|
|
• Maturity date by taking into
account the maturity shortening
provisions in Rule 2a-7
|
|
|
|
• Maturity date determined without
reference to the exceptions
regarding interest rate readjustments
|
|
|
|
• Coupon or yield
|
|
|
|
• Value
|
|
|
|
|
|
|
|
The percentage of the Fund’s total
assets (as such term is defined in
Rule 2a-7) invested in weekly liquid
assets; and the Fund’s net inflows
and outflows.
|
Each business day as of the end of the preceding business day
|
Six months
|
|
Complete portfolio holdings, and
information derived there from, as of
month-end or as of some other
period determined by the Adviser in
its sole discretion
|
One day after month-end or any other period, as may be
determined by the Advisor in its sole discretion
|
Until posting of the fiscal
quarter holdings for the
months included in the
fiscal quarter
|
|
Complete portfolio holdings as of
fiscal quarter-end
|
60-70 calendar days after fiscal quarter-end
|
For 12 months from the
date of posting
|
1
To locate each Fund’s portfolio holdings information, go to www.invesco.com/us, select “Financial Professional” or “Individual Investor,” if applicable. Hover over the “Products” tab and then click on “Mutual Funds.” On the “Mutual Funds” page click on “Fund Materials.” Links to each Fund’s portfolio holdings are located under the “Holdings” column.
87
2
To locate Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio’s portfolio holdings information, go to www.invesco.com/us, choose “Individual Investors,” if applicable. Hover over the “Products” tab and then click on the “Mutual Funds” link. Under “Quick links” click on “Prices and performance” and then click on the “Money Market” tab. A link to the Fund’s portfolio holdings is located under the “Monthly Holdings” and “Mid-Month Holdings” column.
You may also obtain the publicly available portfolio holdings information described
above by contacting us at 1-800-959-4246.
Notwithstanding the other provisions of the Holdings Disclosure Policy, Invesco and
its affiliates may disclose portfolio holdings information on its website earlier than dictated by the
Holdings Disclosure Policy in the case of market, geopolitical or company-specific (or other) events that cause
Invesco to conclude that posting such information on its website is consistent with its fiduciary duties to
the Funds.
Selective disclosure of portfolio holdings information pursuant to Non-Disclosure
Agreement. Employees of Invesco and its affiliates may disclose non-public full portfolio holdings
information on a selective basis only if Invesco approves the parties to whom disclosure of non-public
full portfolio holdings information will be made. Invesco must determine that the proposed selective disclosure
will be made for business purposes of the applicable Fund and is in the best interest of the applicable Fund’s shareholders. In making such determination, Invesco will address any perceived conflicts of interest
between shareholders of such Fund and Invesco or its affiliates as part of granting its approval.
The Board exercises continuing oversight of the disclosure of Fund portfolio holdings
information by (1) overseeing the implementation and enforcement of the Holdings Disclosure Policy and the Invesco Funds’ Code of Ethics by the Chief Compliance Officer (or his designee) of Invesco and the
Invesco Funds and (2) considering reports and recommendations by the Chief Compliance Officer concerning
any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7
under the Investment Advisers Act of 1940, as amended (the Advisers Act)) that may arise in connection
with the Holdings Disclosure Policy. Pursuant to the Holdings Disclosure Policy, the Board receives
reports on the specific types of situations in which Invesco proposes to provide such selective disclosure and the
situations where providing selective disclosure raises perceived conflicts of interest between shareholders
of the applicable Fund and Invesco or its affiliates. In any specific situation where Invesco addresses
a perceived conflict, Invesco will report to the Board on the persons to whom such disclosures are to be
made and the treatment of any such conflicts before agreeing to provide selective disclosure.
Invesco discloses non-public full portfolio holdings information to the following
persons in connection with the day-to-day operations and management of the funds advised by Invesco (the Invesco
Funds):
●
Attorneys and accountants;
●
Securities lending agents;
●
Lenders to the Invesco Funds;
●
Rating and rankings agencies;
●
Persons assisting in the voting of proxies;
●
Invesco Funds’ custodians;
●
The Invesco Funds’ transfer agent(s) (in the event of a redemption in kind);
●
Pricing services, market makers, or other fund accounting software providers (to determine
the price of investments held by an Invesco Fund);
●
Brokers identified by the Invesco Funds’ portfolio management team who provide execution and research services to the team;
●
Analysts hired to perform research and analysis for the Invesco Funds’ portfolio management team; and
●
Insurance companies which may receive portfolio holdings information before Invesco posts portfolio holdings information to Invesco's website (to allow such insurance companies to post
portfolio
88
holdings information to their websites at approximately the same time that Invesco
posts portfolio holdings information to Invesco's website).
In many cases, Invesco will disclose current portfolio holdings information on a daily
basis to these persons. In these situations, Invesco has entered into non-disclosure agreements which
provide that the recipient of the portfolio holdings information will maintain the confidentiality
of such portfolio holdings information and will not trade on such information (Non-disclosure Agreements). Please
refer to Appendix B for a list of examples of persons to whom Invesco provides non-public portfolio holdings
information on an ongoing basis.
Invesco will also disclose non-public portfolio holdings information if such disclosure
is required by applicable laws, rules or regulations, or by regulatory authorities having jurisdiction
over Invesco and its affiliates or the Invesco Funds, and where there is no other way to transact the Funds'
business without disclosure of such portfolio holdings information.
The Holdings Disclosure Policy provides that the Funds, Invesco or any other party
in connection with the disclosure of portfolio holdings information will not request, receive or accept any
compensation (including compensation in the form of the maintenance of assets in any Fund or other mutual
fund or account managed by Invesco or one of its affiliates) for the selective disclosure of portfolio holdings
information.
Disclosure of certain portfolio holdings information without Non-Disclosure Agreement. Invesco and its affiliates that provide services to the Funds, the Sub-Advisers and each of
their employees may receive or have access to portfolio holdings information as part of the day to day
operations of the Funds.
Employees of Invesco and its affiliates may express their views orally or in writing
on one or more of the Funds' portfolio investments or may state that a Fund has recently purchased or sold,
or continues to own, one or more investments. The investments subject to these views and statements may
be ones that were purchased or sold since the date on which portfolio holdings was made available on the Fund’s website and therefore may not be reflected on the portfolio holdings information disclosed on
the website. Such views and statements may be made to various persons, including members of the press, shareholders
in the applicable Fund, persons considering investing in the applicable Fund or representatives of such
shareholders or potential shareholders, such as fiduciaries of a 401(k) plan and their advisers. The
nature and content of the views and statements provided to each of these persons may differ.
Disclosure of portfolio holdings information to traders. Additionally, employees of Invesco and its affiliates may disclose one or more of the investments held by a Fund when purchasing
and selling investments through broker-dealers, futures commissions merchants, clearing agencies
and other counterparties requesting bids on investments, obtaining price quotations on investments,
or in connection with litigation involving the Funds' portfolio investments. Invesco does not enter
into formal Non-Disclosure Agreements in connection with these situations; however, the Funds would not continue
to conduct business with a person who Invesco believed was misusing the disclosed information.
Disclosure of portfolio holdings of other Invesco-managed products. Invesco and its affiliates manage products sponsored by companies other than Invesco, including investment companies,
offshore funds, and separate accounts. In many cases, these other products are managed in a
similar fashion to certain Invesco Funds (as defined herein) and thus have similar portfolio holdings.
The sponsors of these other products managed by Invesco and its affiliates may disclose the portfolio holdings
of their products at different times than Invesco discloses portfolio holdings for the Invesco Funds.
MANAGEMENT OF THE TRUST
Board of Trustees
The Trustees and officers of the Trust, their principal occupations during at least
the last five years and certain other information concerning them are set forth in Appendix C.
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Qualifications and Experience. In addition to the information set forth in Appendix C, the following sets forth additional information about the qualifications and experience of each of the
Trustees.
Interested Trustees
Jeffrey H. Kupor, Trustee
Jeffrey Kupor has been a member of the Board of Trustees of the Invesco Funds since 2024. Mr. Kupor is Senior Managing Director and General Counsel at Invesco Ltd.
Mr. Kupor joined Invesco Ltd. in 2002 and has held a number of legal roles, including,
most recently, Head of Legal, Americas, in which role he was responsible for legal support for Invesco's
Americas business. Prior to joining the firm, he practiced law at Fulbright & Jaworski LLP (now known
as Norton Rose Fulbright), specializing in complex commercial and securities litigation. He also served as the
general counsel of a publicly traded communication services company.
Mr. Kupor earned a BS degree in economics from the Wharton School at the University
of Pennsylvania and a JD from the Boalt Hall School of Law (now known as Berkeley Law) at the University
of California at Berkeley.
The Board believes that Mr. Kupor’s current and past positions with the Invesco complex along with his legal background and experience as an executive in the investment management area
benefits the Funds.
Douglas Sharp, Trustee
Douglas Sharp has been a member of the Board of Trustees of the Invesco Funds since
2024. Mr. Sharp is Senior Managing Director, Head of Americas & EMEA (Europe, the Middle East, and Africa) at Invesco Ltd. He also served as Director and Chairman of the Board of Invesco UK Limited (Invesco’s European subsidiary board) and as Director, Chairman and Chief Executive of Invesco Fund Managers Limited.
Mr. Sharp joined Invesco Ltd. in 2008 and has served in multiple leadership roles across the company, including his previous role as Head of EMEA. Prior to that, he ran Invesco Ltd.’s EMEA retail business and served as head of strategy and business planning and as chief administrative officer
for Invesco Ltd.’s US institutional business. Before joining the firm, he was with the strategy consulting firm McKinsey & Co., where he served clients in the financial services, energy, and logistics sectors.
The Board believes that Mr. Sharp’s current and past positions within the Invesco complex along with his experience in the investment management business benefits the Funds.
Independent Trustees
Beth Ann Brown, Trustee and Chair
Beth Ann Brown has been a member of the Board of Trustees of the Invesco Funds since
2019 and Chair since 2022. From 2016 to 2019, Ms. Brown served on the boards of certain investment companies
in the Oppenheimer Funds complex.
Ms. Brown has served as Director of Caron Engineering, Inc. since 2018 and as an Independent
Consultant since 2012.
Previously, Ms. Brown served in various capacities at Columbia Management Investment
Advisers LLC, including Head of Intermediary Distribution, Managing Director, Strategic Relations
and Managing Director, Head of National Accounts. She also served as Senior Vice President, National Account
Manager from 2002-2004 and Senior Vice President, Key Account Manager from 1999 to 2002 of Liberty Funds
Distributor, Inc. From 2013 through 2022, she served as Director, Vice President (through 2019) and
President (2019-2022) of Grahamtastic Connection, a non-profit organization.
From 2014 to 2017, Ms. Brown served on the Board of Advisors of Caron Engineering
Inc. and also served as President and Director of Acton Shapleigh Youth Conservation Corps, a non–profit organization, from 2012 to 2015.
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The Board believes that Ms. Brown’s experience in financial services and investment management and as a director of other investment companies benefits the Funds.
Carol Deckbar, Trustee
Carol Deckbar has been a member of the Board of Trustees of the Invesco Funds since
2024. Ms. Deckbar previously served as Executive Vice President and Chief Product Officer at
Teachers Insurance and Annuity Association (TIAA) Financial Services from 2019 to 2021. She also served as
Executive Vice President and Principal of College Retirement Equities Fund at TIAA from 2014 to 2021.
Ms. Deckbar served in various other capacities at TIAA since joining in 2007, including Executive Vice
President and Head of Institutional Investments and Endowment Services from 2016 to 2019.
Prior to joining TIAA, Ms. Deckbar was a Senior Vice President of AMSOUTH Bank from
2002 to 2006, and before that she served as Senior Vice President, Managing Director, for Bank of
America Capital Management from 1999 to 2002. She began her asset management career with the Evergreen
Funds where she served as Senior Vice President, Managing Director from 1991 to 1998.
From 2019 to 2020, Ms. Deckbar served as Chairman of the TIAA Retirement Plan Investments
Committee and as an Executive Sponsor at Advance, a council for the advancement of
women. She has also held various memberships, including at Investment Company Institute, from 2017 to
2019, Fortune 400 Most Powerful Women Network, from 2012 to 2015, and Mutual Fund Education Alliance, from
2010 to 2015.
The Board believes that Ms. Deckbar’s experience in financial services and investment management benefits the Funds.
Cynthia Hostetler, Trustee
Cynthia Hostetler has been a member of the Board of Trustees of the Invesco Funds
since 2017.
Ms. Hostetler is currently a member of the board of directors of the Vulcan Materials
Company, a public company engaged in the production and distribution of construction materials, Trilinc
Global Impact Fund LLC, a publicly registered non-traded limited liability company that invests in a diversified
portfolio of private debt instruments, and Resideo Technologies, Inc., a public company that manufactures and distributes smart
home security products and solutions worldwide. Ms. Hostetler also serves on the board of governors of the Investment Company Institute and is a member of the governing council of the Independent
Directors Council, both of which are professional organizations in the investment management industry.
Previously, Ms. Hostetler served as a member of the board of directors/trustees of
Aberdeen Investment Funds, a mutual fund complex, Edgen Group Inc., a public company that provides products
and services to energy and construction companies, from 2012 to 2013, prior to its sale to Sumitomo,
Genesee & Wyoming, Inc., a public company that owns and operates railroads worldwide, from 2018 to 2019,
prior to its sale to Brookfield Asset Management, and Textainer Group Holdings Ltd., a public company that is the world’s second largest shipping container leasing company, prior to its sale to Stonepeak
in March 2024. Ms. Hostetler was also a member of the board of directors of the Eisenhower Foundation,
a non-profit organization.
From 2001 to 2009, Ms. Hostetler served as Head of Investment Funds and Private Equity
at Overseas Private Investment Corporation (“OPIC”), a government agency that supports US investment in the emerging markets. Ms. Hostetler oversaw a multi-billion dollar investment portfolio in private
equity funds. Prior to joining OPIC, Ms. Hostetler served as President and member of the board of directors
of First Manhattan Bancorporation, a bank holding company, from 1991 to 2007, and its largest subsidiary,
First Savings Bank, from 1991 to 2006 (Board Member) and from 1996 to 2001 (President).
The Board believes that Ms. Hostetler’s knowledge of financial services and investment management, her experience as a director of other companies, including a mutual fund complex, her
legal background, and other professional experience gained through her prior employment benefit the Funds.
91
Dr. Eli Jones, Trustee
Dr. Eli Jones has been a member of the Board of Trustees of the Invesco Funds since
2016.
Dr. Jones has served as Board Member of the regional board, First Financial Bank Texas
since 2021 and Board Member, First Financial Bankshares, Inc. Texas since 2022. Since 2020, Dr. Jones has served as a director on the board of directors of Insperity, Inc. (“Insperity”). From 2004 to 2016, Dr. Jones was chair of the Compensation Committee, a member of the Nominating and Corporate Governance Committee
and a director on the board of directors of Insperity.
Dr. Jones is a Professor of Marketing, Lowry and Peggy Mays Eminent Scholar, and Dean
Emeritus of Mays Business School at Texas A&M University. From 2015 to 2021, Dr. Jones served
as Dean of Mays Business School at Texas A&M University. From 2012 to 2015, Dr. Jones was the dean
of the Sam M. Walton College of Business at the University of Arkansas and holder of the Sam M. Walton
Leadership Chair in Business. Prior to joining the faculty at the University of Arkansas, he was dean
of the E. J. Ourso College of Business and Ourso Distinguished Professor of Business at Louisiana State University
from 2008 to 2012; professor of marketing and associate dean at the C.T. Bauer College of Business at
the University of Houston from 2007 to 2008; an associate professor of marketing from 2002 to 2007; and an assistant
professor from 1997 until 2002. He taught at Texas A&M University for several years before joining
the faculty of the University of Houston.
Dr. Jones served as the executive director of the Program for Excellence in Selling
and the Sales Excellence Institute at the University of Houston from 1997 to 2007. Before becoming
a professor, he worked in sales and sales management for three Fortune 100 companies: Quaker Oats, Nabisco,
and Frito-Lay. Dr. Jones is a past director of Arvest Bank. He received his Bachelor of Science degree
in journalism in 1982, his MBA in 1986 and his Ph.D. in 1997, all from Texas A&M University.
The Board believes that Dr. Jones’ experience in academia and his experience in marketing benefits the Funds.
Elizabeth Krentzman, Trustee
Elizabeth Krentzman has been a member of the Board of Trustees of the Invesco Funds
since 2019. From 2014 to 2019, Ms. Krentzman served on the boards of certain investment companies
in the Oppenheimer Funds complex.
Ms. Krentzman served from 2017 to 2022, as a member of the Cartica Funds Board of
Directors (private investment funds). Ms. Krentzman previously served as a member of the Board of Trustees
of the University of Florida National Board Foundation from 2016 to 2021. She also served as a member
of the Board of Trustees of the University of Florida Law Center Association, Inc. from 2016 to 2021,
as a member of its Audit Committee from 2016 to 2020, and as a member of its Membership Committee from 2020
to 2021.
Ms. Krentzman served from 1997 to 2004 and from 2007 and 2014 in various capacities
at Deloitte & Touche LLP, including Principal and Chief Regulatory Advisor for Asset Management
Services, U.S. Mutual Fund Leader and National Director of the Investment Management Regulatory Consulting
Practice. She served as General Counsel of the Investment Company Institute from 2004 to 2007.
From 1996 to 1997, Ms. Krentzman served as an Assistant Director of the Division of
Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities
and Exchange Commission. She also served from 1991 to 1996 in various positions with the Division
of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission and from 1987 to 1991 as an Associate at Ropes & Gray LLP.
The Board believes that Ms. Krentzman’s legal background, experience in financial services and accounting and as a director of other investment companies benefits the Funds.
Anthony J. LaCava, Jr., Trustee
Anthony J. LaCava, Jr. has been a member of the Board of Trustees of the Invesco Funds
since 2019.
92
Previously, Mr. LaCava served as a member of the board of directors and as a member
of the audit committee of Blue Hills Bank, a publicly traded financial institution.
Mr. LaCava retired after a 37-year career with KPMG LLP (“KPMG”) where he served as senior partner for a wide range of firm clients across the retail, financial services, consumer markets,
real estate, manufacturing, health care and technology industries. From 2005 to 2013, Mr. LaCava
served as a member of the board of directors of KPMG and chair of the board’s audit and finance committee and nominating committee. He also previously served as Regional Managing Partner from 2009 through
2012 and Managing Partner of KPMG’s New England practice.
Mr. LaCava currently serves as Member and Chairman of the Business School Advisory
Council of Bentley University and as a member of American College of Corporate Directors and
Board Leaders, Inc.
The Board believes that Mr. LaCava’s experience in audit and financial services benefits the Funds.
James “Jim” Liddy, Trustee
James “Jim” Liddy has been a member of the Board of Trustees of the Invesco Funds since 2024. Mr. Liddy is a Retired Partner of KPMG LLP (KPMG) and previously served as Chairman of KPMG’s Global Financial Services, Americas practice from 2017 through 2021. He also led KPMG’s U.S. Financial Services practice from 2015 through 2021.
Prior to assuming his most recent role in 2017, Mr. Liddy served as Vice Chair of
Audit and on various other committees at KPMG. He also previously served as National Managing Partner of
Audit and was a member of the firm’s Global Audit Steering Group.
The Board believes that Mr. Liddy’s audit experience and knowledge of financial services and investment management benefits the Funds.
Dr. Prema Mathai-Davis, Trustee
Dr. Prema Mathai-Davis has been a member of the Board of Trustees of the Invesco Funds
since 1998.
Since 2021, Dr. Mathai-Davis has served as a member of the Board of Positive Planet
US, a non-profit organization and Healthcare Chaplaincy Network, a non-profit organization.
Previously, Dr. Mathai-Davis served as co-founder and partner of Quantalytics Research,
LLC, (a FinTech Investment Research Platform) from 2017 to 2019, when the firm was acquired by Forbes Media Holdings, LLC.
Dr. Mathai-Davis previously served as Chief Executive Officer of the YWCA of the USA
from 1994 until her retirement in 2000. Prior to joining the YWCA, Dr. Mathai-Davis served as the
Commissioner of the New York City Department for the Aging. She was a Commissioner and Board Member of the
Metropolitan Transportation Authority of New York, the largest regional transportation network
in the U.S. Dr. Mathai-Davis also served as a Trustee of the YWCA Retirement Fund, the first and oldest pension
fund for women, and on the advisory board of the Johns Hopkins Bioethics Institute. She was a member of the
Board of Visitors of the University of Maryland School of Public Policy, and on the visiting Committee of The
Harvard University Graduate School of Education.
Dr. Mathai-Davis was the president and chief executive officer of the Community Agency
for Senior Citizens, a non-profit social service agency that she established in 1981. She also
directed the Mt. Sinai School of Medicine-Hunter College Long-Term Care Gerontology Center, one of the first
of its kind.
The Board believes that Dr. Mathai-Davis’ extensive experience in running public and charitable institutions benefits the Funds.
93
Joel W. Motley, Trustee
Joel W. Motley has been a member of the Board of Trustees of the Invesco Funds since
2019. From 2002 to 2019, Mr. Motley served on the boards of certain investment companies in the Oppenheimer
Funds complex.
In May 2022, Mr. Motley rejoined the Vestry and the Investment Committee of Trinity
Church Wall Street. Since 2021, Mr. Motley has served as a Board member of the Trust for Mutual Understanding,
which makes grants to arts and environmental organizations in Eastern Europe. Since 2021, Mr.
Motley has served as a member of the board of Blue Ocean Acquisition Corp. Since 2016, Mr. Motley has served
as an independent director of the Office of Finance of the Federal Home Loan Bank System. He has served
as Managing Director of Carmona Motley, Inc., a privately-held financial advisory firm, since
2002.
Mr. Motley also serves as a member of the Council on Foreign Relations and its Finance
and Budget Committee. He is a member of the Investment Committee and is Chairman Emeritus of
the Board of Human Rights Watch and a member of the Investment Committee and the Board of Historic Hudson
Valley, a non-profit cultural organization.
Since 2011, he has served as a Board Member and Investment Committee Member of the
Pulitzer Center for Crisis Reporting, a non-profit journalism organization. Mr. Motley also serves
as Director and member of the Board and Investment Committee of The Greenwall Foundation, a bioethics research
foundation, and as a Director of Friends of the LRC, a South Africa legal services foundation.
Previously, Mr. Motley served as Managing Director of Public Capital Advisors, LLC,
a privately held financial advisory firm, from 2006 to 2017. He also served as Managing Director of
Carmona Motley Hoffman Inc. a privately-held financial advisor, and served as a Director of Columbia Equity
Financial Corp., a privately-held financial advisor, from 2002 to 2007.
The Board believes that Mr. Motley’s experience in financial services and as a director of other investment companies benefits the Funds.
Teresa M. Ressel, Trustee
Teresa Ressel has been a member of the Board of Trustees of the Invesco Funds since
2017.
Ms. Ressel has previously served within the private sector and the U.S. government
as well as consulting. Formerly, Ms. Ressel served at UBS AG in various capacities, including as Chief Executive
Officer of UBS Securities LLC, a broker-dealer division of UBS Investment Bank, and as Group Chief
Operating Officer of the Americas.
Between 2001 and 2004, Ms. Ressel served at the U.S. Treasury, initially as Deputy
Assistant Secretary for Management & Budget and then as Assistant Secretary for Management and Chief Financial
Officer. Ms. Ressel was confirmed by the U.S. Senate and anchored financial duties at the Department,
including finance, accounting, risk, audit and performance measurement.
Ms. Ressel also volunteers within her community across a number of functions and serves
on the board of GAVI, the Global Vaccine Alliance (non-profit) supporting children’s health.
The Board believes that Ms. Ressel’s risk management and financial experience in both the private and public sectors benefits the Funds.
Robert C. Troccoli, Trustee
Robert C. Troccoli has been a member of the Board of Trustees of the Invesco Funds
since 2016.
Mr. Troccoli retired after a 39-year career with KPMG LLP (“KPMG”), where he served as a senior Partner. From 2013 to 2017, he was an adjunct professor at the University of Denver’s Daniels College of Business.
94
Mr. Troccoli’s leadership roles during his career with KPMG included managing partner and partner in charge of the Denver office’s Financial Services Practice. He served regulated investment companies, investment advisors, private partnerships, private equity funds, sovereign wealth
funds, and financial services companies. Toward the end of his career, Mr. Troccoli was a founding member of KPMG’s Private Equity Group in New York City, where he served private equity firms and sovereign wealth
funds. Mr. Troccoli also served mutual fund clients along with several large private equity firms as Global Lead Partner of KPMG’s Private Equity Group.
The Board believes that Mr. Troccoli’s experience as a partner in a large accounting firm and his knowledge of investment companies, investment advisors, and private equity firms benefits
the Funds.
Daniel S. Vandivort, Trustee
Daniel S. Vandivort has been a member of the Board of Trustees of the Invesco Funds
since 2019. From 2014 to 2019, Mr. Vandivort served on the boards of certain investment companies in
the Oppenheimer Funds complex, as a Trustee and as the Governance Committee Chair.
Mr. Vandivort also served as Chairman, Lead Independent Director, and Chairman of
the Audit Committee of the Board of Directors of the Value Line Funds from 2008 through 2014.
Previously, Mr. Vandivort also served as a Trustee and Chairman of the Weiss Peck
and Greer Mutual Funds Board from 2004 to 2005.
Previously, Mr. Vandivort served at Weiss Peck and Greer/Robeco Investment Management
from 1994 to 2007, as President and Chief Investment Officer and prior to that as Managing Director
and Head of Fixed Income. Mr. Vandivort also served in various capacities at CS First Boston from 1984
to 1994, including as Head of Fixed Income at CS First Boston Investment Management.
Mr. Vandivort was also a Trustee on the Board of Huntington Disease Foundation of
America from 2007 to 2013 and from 2015 to 2019. He also served as Treasurer and Chairman of the Audit
and Finance Committee of Huntington Disease Foundation of America from 2016 to 2019.
Mr. Vandivort currently serves as President of Flyway Advisory Services LLC, a consulting
and property management company. He is also a Member of the Investment Committee for the Historic Charleston Foundation.
The Board believes that Mr. Vandivort’s experience in financial services and investment management and as a director of other investment companies benefits the Funds.
Management Information
The Trustees have the authority to take all actions that they consider necessary or
appropriate in connection with oversight of the Trust, including, among other things, approving the
investment objectives, investment policies and fundamental investment restrictions for the Funds. The Trust
has entered into agreements with various service providers, including the Funds’ investment advisers, administrator, transfer agent, distributor and custodians, to conduct the day-to-day operations of the Funds.
The Trustees are responsible for selecting these service providers, approving the terms of their contracts
with the Funds, and exercising general oversight of these arrangements on an ongoing basis.
Certain Trustees and officers of the Trust are affiliated with Invesco and Invesco
Ltd., the parent corporation of Invesco. All of the Trust’s executive officers hold similar offices with some or all of the other Trusts.
Leadership Structure and the Board of Trustees. The Board is currently composed of fourteen Trustees, including twelve Trustees who are not “interested persons” of the Funds, as that term is defined in the 1940 Act (collectively, the Independent Trustees and each, an Independent Trustee). In
addition to eight regularly scheduled meetings per year, the Board holds special meetings or informal conference
calls to discuss specific matters that may require action prior to the next regular meeting. As discussed
below, the Board has
95
established four standing committees – the Audit Committee, the Compliance Committee, the Governance Committee and the Investments Committee (the Committees), to assist the Board in performing
its oversight responsibilities.
The Board has appointed an Independent Trustee to serve in the role of Chair. The Chair’s primary role is to preside at meetings of the Board and act as a liaison with the Adviser and other
service providers, officers, attorneys, and other Trustees between meetings. The Chair also participates in the
preparation of the agenda for the meetings of the Board, is active with mutual fund industry organizations,
and may perform such other functions as may be requested by the Board from time to time. Except for any duties
specified pursuant to the Trust’s Declaration of Trust or By-laws, the designation of Chair does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations
or liability imposed on such person as a member of the Board generally.
The Board believes that its leadership structure, including having an Independent
Trustee as Chair, allows for effective communication between the Trustees and management, among the Trustees
and among the Independent Trustees. The existing Board structure, including its Committee structure,
provides the Independent Trustees with effective control over Board governance while also allowing
them to receive and benefit from insight from the interested Trustee who is an active officer of the Funds’ investment adviser. The Board’s leadership structure promotes dialogue and debate, which the Board believes allows for the proper consideration of matters deemed important to the Funds and their shareholders and
results in effective decision-making.
Risk Oversight. The Board considers risk management issues as part of its general oversight responsibilities throughout the year at its regular meetings and at regular meetings
of its Committees. Invesco prepares regular reports that address certain investment, valuation and compliance
matters, and the Board as a whole or the Committees also receive special written reports or presentations on
a variety of risk issues at the request of the Board, a Committee or the Senior Officer.
The Board also considers liquidity risk management issues as part of its general oversight
responsibilities and oversees the Trust's liquidity risk through, among other things, receiving periodic
reporting and presentations by Invesco personnel that address liquidity matters. As required by
Rule 22e-4 under the 1940 Act, the Board, including a majority of the Independent Trustees, has approved the Trust’s Liquidity Risk Management ("LRM") Program, which is reasonably designed to assess and manage the Trust’s liquidity risk, and has appointed the LRM Program Administrator that is responsible for administering
the LRM Program. The Board also reviews, no less frequently than annually, a written report prepared
by the LRM Program Administrator that addresses, among other items, the operation of the program and
assesses its adequacy and effectiveness of implementation. The Board also oversees risks related to certain Funds’ use of derivatives as part of its general oversight responsibilities. The Board has approved
a derivatives risk manager, which is responsible for administering the derivatives risk management program (“DRM Program”) for the Funds that are required to implement a DRM Program. The Board meets with the
derivatives risk manager on a periodic basis, including receiving quarterly and annual reports from
the derivatives risk manager, to review the implementation of the DRM Program.
The Audit Committee assists the Board with its oversight of the Funds' accounting
and auditing process. The Audit Committee is responsible for selecting the Funds' independent registered
public accounting firm (auditors), including evaluating their independence and meeting with such auditors
to consider and review matters relating to the Funds' financial reports and internal controls. In addition,
the Audit Committee meets regularly with representatives of Invesco Ltd.’s internal audit group to review reports on their examinations of functions and processes within Invesco that affect the Funds. The Audit Committee
also oversees the Adviser’s process for valuing the Funds’ portfolio investments and receives reports from management regarding its process and the valuation of the Funds’ portfolio investments as consistent with the valuation policy approved by the Board and related procedures.
The Compliance Committee receives regular compliance reports prepared by Invesco’s compliance group and meets regularly with the Fund’s Chief Compliance Officer (CCO) to discuss compliance issues, including compliance risks. The Compliance Committee has recommended and the Board has adopted
compliance
96
policies and procedures for the Funds and for the Funds’ service providers. The compliance policies and procedures are designed to detect, prevent and correct violations of the federal securities
laws.
The Governance Committee monitors the composition of the Board and each of its Committees
and monitors the qualifications of the Trustees to ensure adherence to certain governance
undertakings applicable to the Funds. In addition, the Governance Committee oversees an annual self-assessment
of the Board and its committees and addresses governance risks, including insurance and fidelity bond
matters, for the Trust.
The Investments Committee and its sub-committees receive regular written reports describing
and analyzing the investment performance of the Invesco Funds. In addition, Invesco’s Chief Investment Officers and the portfolio managers of the Funds meet regularly with the Investments Committee
or its sub-committees to discuss portfolio performance, including investment risk, such as the impact on
the Funds of investments in particular types of securities or instruments, such as derivatives. To the extent
that a Fund changes a particular investment strategy that could have a material impact on the Fund’s risk profile, the Board generally is consulted in advance with respect to such change.
Committee Structure
The members of the Audit Committee are Messrs. LaCava (Chair), Liddy and Troccoli, Dr. Jones, and Mss. Hostetler and Ressel. The Audit Committee performs a number of functions with
respect to the oversight of the Funds’ accounting and financial reporting, including: (i) assisting the Board with its oversight of the qualifications, independence and performance of the independent registered public
accountants; (ii) selecting independent registered public accountants for the Funds; (iii) to the extent required,
pre-approving certain audit and permissible non-audit services; (iv) overseeing the financial reporting
process for the Funds; (v) assisting the Board with its oversight of the integrity of the Funds’ financial statements and compliance with legal and regulatory requirements that relate to the Funds’ accounting and financial reporting, internal control over financial reporting and independent audits; (vi) pre-approving engagements for
non-audit services to be provided by the Funds’ independent auditors to the Funds’ investment adviser or to any of its affiliates; and (vii) overseeing the performance of the fair valuation determinations by the Adviser.
During the fiscal year ended February 29, 2024, the Audit Committee held four meetings.
The members of the Compliance Committee are Messrs. Motley and Vandivort, and Mss.
Brown, Deckbar and Krentzman (Chair) and Dr. Mathai-Davis. The Compliance Committee performs a number
of functions with respect to compliance matters, including: (i) reviewing and making recommendations
concerning the qualifications, performance and compensation of the Funds’ Chief Compliance Officer; (ii) reviewing recommendations and reports made by the Chief Compliance Officer of the Funds regarding
compliance matters; (iii) overseeing compliance policies and procedures of the Funds and their
service providers; (iv) overseeing potential conflicts of interest that are reported to the Compliance Committee
by Invesco, the Chief Compliance Officer or other independent advisors; (v) reviewing reports prepared by a third party’s compliance review of Invesco; (vi) if requested by the Board, overseeing risk management
with respect to the Funds (other than risks overseen by the other Committees), including receiving and
overseeing risk management reports from Invesco that are applicable to the Funds and their service
providers; and (vii) reviewing reports by Invesco on correspondence with regulators or governmental agencies
with respect to the Funds and recommending to the Board what action, if any, should be taken by the Funds
in light of such reports. During the fiscal year ended February 29, 2024, the Compliance Committee held four meetings.
The members of the Governance Committee are Messrs. Motley and Vandivort (Chair) and
Mss. Brown and Hostetler and Dr. Mathai-Davis. The Governance Committee performs a number of
functions with respect to governance, including: (i) nominating persons to serve as Independent Trustees
and as members of each Committee, and nominating the Chair of the Board, the Chair of each Committee and
the Chair of each Sub-Committee of the Investments committee; (ii) reviewing and making recommendations to the full
Board regarding the size and composition of the Board and the compensation payable to the
Independent Trustees;(iii) overseeing the annual evaluation of the performance of the Board and
its Committees; (iv) considering and overseeing the selection of independent legal counsel to the Independent
Trustees; (v) considering and overseeing the selection and engagement of a Senior Officer if and
as they deem
97
appropriate, including compensation and scope of services, and recommending all such
matters to the Board or the independent trustees as appropriate; (vi) reviewing administrative and/or logistical
matters pertaining to the operations of the Board; and (vii) reviewing annually recommendations from Invesco
regarding amounts and coverage of primary and excess directors and officers/errors and omissions liability
insurance and allocation of premiums. During the fiscal year ended February 29, 2024, the Governance Committee held nine meetings.
The Governance Committee will consider nominees recommended by a shareholder to serve
as trustees, provided: (i) that such submitting shareholder provides the information required by,
and otherwise complies with the applicable provisions of, the Fund’s governing instruments, (ii) that such submitting shareholder is a shareholder of record at the time he or she submits such names and is entitled to
vote at the meeting of shareholders at which trustees will be elected; and (iii) that the Governance Committee
or the Board, as applicable, shall make the final determination of persons to be nominated. Notice
procedures set forth in the Trust’s bylaws require that any shareholder of a Fund desiring to nominate a candidate for election at a shareholder meeting must provide certain information about itself and the candidate,
and must submit to the Trust’s Secretary the nomination in writing not later than the close of business on the later of the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60 days from such anniversary date or if the
Trust has not previously held an annual meeting, notice by the Shareholder to be timely must be so delivered
not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close
of business on the later of the 90th day prior to such annual meeting or the tenth day following the
day on which public announcement of the date of such meeting is first made by the Trust.
The members of the Investments Committee are Messrs. LaCava, Liddy, Motley (Sub-Committee Chair), Troccoli (Sub-Committee Chair) and Vandivort, Mss. Brown, Deckbar, Hostetler (Chair), Krentzman and Ressel and Drs. Jones and Mathai-Davis (Sub-Committee Chair). The Investments Committee’s primary purposes are to assist the Board in its oversight of the investment management services
provided by Invesco and the Sub-Advisers and to periodically review Fund performance information, and
information regarding the investment personnel and other resources devoted to the management of the Funds and
make recommendations to the Board, when applicable. During the fiscal year ended February
29, 2024, the Investments Committee held four meetings.
The Investments Committee has established three Sub-Committees and delegated to the
Sub-Committees responsibility for, among other matters: (i) reviewing the performance of the Invesco
Funds that have been assigned to a particular Sub-Committee (for each Sub-Committee, the Designated
Funds), except to the extent the Investments Committee takes such action directly; (ii) reviewing
with the applicable portfolio managers from time to time the investment objective(s), policies, strategies, performance
and risks and other investment-related matters of the Designated Funds; and (iii) being generally familiar
with the investment objectives and principal investment strategies of the Designated Funds.
Trustee Ownership of Fund Shares
The dollar range of equity securities beneficially owned by each trustee (i) in the
Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustee within
the Invesco Funds complex, is set forth in Appendix C.
Compensation
Each Trustee who is not affiliated with Invesco is compensated for his or her services
according to a fee schedule that recognizes the fact that such Trustee also serves as a Trustee of other
Invesco Funds. Each such Trustee receives a fee, allocated among the Invesco Funds for which he or she
serves as a Trustee that consists of an annual retainer component and a meeting fee component. The Chair of
the Board and of each Committee and Sub-Committee receive additional compensation for their services.
98
Information regarding compensation paid or accrued for each Trustee of the Trust who
was not affiliated with Invesco during the year ended December 31, 2023 is found in Appendix D.
Retirement Policy
The Trustees have adopted a retirement policy that permits each Trustee to serve until
December 31 of the year in which the Trustee turns 75.
Pre-Amendment Retirement Plan For Trustees
The Trustees have adopted a Retirement Plan for the Trustees who are not affiliated
with the Adviser. A description of the pre-amendment Retirement Plan follows. Annual retirement benefits
are available from the Funds and/or the other Invesco Funds for which a Trustee serves (each, a Covered Fund),
for each Trustee who is not an employee or officer of the Adviser, who either (a) became a Trustee
prior to December 1, 2008, and who has at least five years of credited service as a Trustee (including service
to a predecessor fund) of a Covered Fund, or (b) was a member of the Board of Trustees of a Van Kampen Fund immediately
prior to June 1, 2010 (Former Van Kampen Trustee), and has at least one year of credited service
as a Trustee of a Covered Fund after June 1, 2010.
For Trustees other than Former Van Kampen Trustees, effective January 1, 2006, for
retirements after December 31, 2005, the retirement benefits will equal 75% of the Trustee’s annual retainer paid to or accrued by any Covered Fund with respect to such Trustee during the twelve-month period prior
to retirement, including the amount of any retainer deferred under a separate deferred compensation
agreement between the Covered Fund and the Trustee. The amount of the annual retirement benefit does
not include additional compensation paid for Board meeting fees or compensation paid to the Chair of the
Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to
the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for a number of
years equal to the lesser of (i) sixteen years or (ii) the number of such Trustee’s credited years of service. If a Trustee dies prior to receiving the full amount of retirement benefits, the remaining payments will be made
to the deceased Trustee’s designated beneficiary for the same length of time that the Trustee would have received the payments based on his or her service or, if the Trustee has elected, in a discounted
lump sum payment. A Trustee must have attained the age of 65 (60 in the event of disability) to receive
any retirement benefit. A Trustee may make an irrevocable election to commence payment of retirement benefits
upon retirement from the Board before age 72; in such a case, the annual retirement benefit is subject
to a reduction for early payment.
If the Former Van Kampen Trustee completes at least 10 years of credited service after
June 1, 2010, the retirement benefit will equal 75% of the Former Van Kampen Trustee’s annual retainer paid to or accrued by any Covered Fund with respect to such Trustee during the twelve-month period prior
to retirement, including the amount of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and such Trustee. The amount of the annual retirement benefit does not
include additional compensation paid for Board meeting fees or compensation paid to the Chair of the
Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to
the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for 10 years beginning
after the later of the Former Van Kampen Trustee’s termination of service or attainment of age 72 (or age 60 in the event of disability or immediately in the event of death). If a Former Van Kampen Trustee dies
prior to receiving the full amount of retirement benefits, the remaining payments will be made to the deceased Trustee’s designated beneficiary or, if the Trustee has elected, in a discounted lump sum payment.
If the Former Van Kampen Trustee completes less than 10 years of credited service
after June 1, 2010, the retirement benefit will be payable at the applicable time described in the preceding
paragraph, but will be paid in two components successively. For the period of time equal to the Former Van Kampen Trustee’s years of credited service after June 1, 2010, the first component of the annual retirement
benefit will equal 75% of the compensation amount described in the preceding paragraph. Thereafter, for the
period of time equal to the Former Van Kampen Trustee’s years of credited service after June 1, 2010, the second component of the annual retirement benefit will equal the excess of (x) 75% of the compensation amount
described in the
99
preceding paragraph, over (y) $68,041 plus an interest factor of 4% per year compounded
annually measured from June 1, 2010 through the first day of each year for which payments under this
second component are to be made. In no event, however, will the retirement benefits under the two components
be made for a period of time greater than 10 years. For example, if the Former Van Kampen Trustee completes
7 years of credited service after June 1, 2010, he or she will receive 7 years of payments under the first
component and thereafter 3 years of payments under the second component, and if the Former Van Kampen
Trustee completes 4 years of credited service after June 1, 2010, he or she will receive 4
years of payments under the first component and thereafter 4 years of payments under the second component.
Amendment of Retirement Plan and Conversion to Defined Contribution Plan
The Trustees approved an amendment to the Retirement Plan to convert it to a defined
contribution plan for active Trustees (the Amended Plan). Under the Amended Plan, the benefit amount
was amended for each active Trustee to the present value of the Trustee’s existing retirement plan benefit as of December 31, 2013 (the Existing Plan Benefit) plus the present value of retirement benefits expected
to be earned under the Retirement Plan through the end of the calendar year in which the Trustee attained
age 75 (the Expected Future Benefit and, together with the Existing Plan Benefit, the Accrued Benefit).
On the conversion date, the Covered Funds established bookkeeping accounts in the amount of their pro rata share
of the Accrued Benefit, which is deemed to be invested in one or more Invesco Funds selected by the
participating Trustees. Such accounts will be adjusted from time to time to reflect deemed investment earnings
and losses. Each Trustee’s Accrued Benefit is not funded and, with respect to the payments of amounts held in the accounts, the participating Trustees have the status of unsecured creditors of the Covered Funds.
Trustees will be paid the adjusted account balance under the Amended Plan in quarterly installments for
the same period as described above.
Deferred Compensation Agreements
Certain former Trustees and current Independent Trustees (for purposes of this paragraph only, the Deferring Trustees) have executed a Deferred Compensation Agreement (collectively, the Compensation Agreements). Pursuant to the Compensation Agreements, the Deferring Trustees have
the option to elect to defer receipt of up to 100% of their compensation payable by the Funds, and such amounts
are placed into a deferral account and deemed to be invested in one or more Invesco Funds selected by
the Deferring Trustees. Amounts deferred by Deferring Trustees pursuant to a Compensation Agreement during
the most recent fiscal year are shown in Appendix D – Trustee Compensation Table.
Distributions from these deferral accounts will be paid in cash, generally in equal
quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning
on the date selected under the Compensation Agreement. If a Deferring Trustee dies prior to the
distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed
to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments
of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured
creditors of the Funds and of each other Invesco Fund from which they are deferring compensation.
Purchase of Class A Shares of the Funds at Net Asset Value
The Trustees and certain other affiliated persons of the Trust may purchase Class
A shares of the Invesco Funds without paying an initial sales charge. Invesco Distributors permits such purchases
because there is a reduced sales effort involved in sales to such purchasers, thereby resulting in relatively
low expenses of distribution. For a complete description of the persons who will not pay an initial
sales charge on purchases of Class A shares of the Invesco Funds, see Appendix L — “Purchase, Redemption, Exchange and Pricing of Shares — Purchase and Redemption of Shares — Class A Shares Sold Without an Initial Sales Charge.”
100
Purchases of Class Y Shares of the Funds
The Trustees and certain other affiliated persons of the Trust may purchase Class
Y shares of the Invesco Funds. For a description please see “Appendix L — Purchase, Redemption, Exchange and Pricing of Shares — Purchase and Redemption of Shares — Purchases of Class Y Shares.”
Code of Ethics
Invesco, the Trust, Invesco Distributors and certain of the Sub-Advisers each have
adopted a Code of Ethics that applies to all Invesco Fund trustees and officers, and employees of Invesco,
the Sub-Advisers and their affiliates, and governs, among other things, the personal trading activities
of all such persons. Certain Sub-Advisers have adopted their own Code of Ethics. Each Code of Ethics is designed
to detect and prevent improper personal trading by portfolio managers and certain other employees that could
compete with or take advantage of the Fund’s portfolio transactions. Unless specifically noted, to the extent a Sub-Adviser has adopted its own Code of Ethics, each Sub-Adviser’s Code of Ethics does not materially differ from Invesco’s Code of Ethics discussed below. The Code of Ethics is intended to address conflicts
of interest with the Trust that may arise from personal trading in the Invesco Funds. Personal trading, including
personal trading involving securities that may be purchased or held by an Invesco Fund, is permitted
under the Code of Ethics subject to certain restrictions; however, employees are required to pre-clear security
transactions with the Compliance Officer or a designee and to report transactions on a regular basis.
Proxy Voting Policies
Invesco has adopted its own specific Proxy Voting Policies.
The Board has delegated responsibility for decisions regarding proxy voting for securities
held by each Fund to the following Adviser/Sub-Adviser(s):
|
Fund Name
|
Adviser/Sub-Adviser
|
|
Invesco Corporate Bond Fund
|
Invesco Advisers, Inc.
|
|
Invesco Global Real Estate Fund
|
Invesco Advisers, Inc./Invesco Asset Management Limited
|
|
Invesco Government Money Market
Fund
|
Invesco Advisers, Inc.
|
|
Invesco High Yield Fund
|
Invesco Advisers, Inc.
|
|
Invesco Income Fund
|
Invesco Advisers, Inc.
|
|
Invesco Intermediate Bond Factor
Fund
|
Invesco Advisers, Inc.
|
|
Invesco Real Estate Fund
|
Invesco Advisers, Inc./Invesco Asset Management Limited
|
|
Invesco Advisers, Inc.
|
|
|
Invesco Short Term Bond Fund
|
Invesco Advisers, Inc.
|
|
Invesco U.S. Government Money
Portfolio
|
Invesco Advisers, Inc.
|
Invesco (the Proxy Voting Entity) will vote such proxies in accordance with its proxy
voting policies and procedures, as outlined above, which have been reviewed and approved by the Board,
and which are found in Appendix E. Any material changes to the proxy voting policies and procedures will
be submitted to the Board for approval. The Board will be supplied with a summary quarterly report of each Fund’s proxy voting record. Information regarding how the Funds voted proxies related to their portfolio
securities during the twelve months ended June 30, 2023, is available without charge at our website, http://www.invesco.com/us. This information will also be available at the SEC website, http://www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund’s shares by beneficial or record owners of such Fund and ownership of Fund shares by trustees and officers as a group is found
in Appendix F. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to “control” that Fund.
101
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Invesco serves as the Funds' investment adviser. The Adviser manages the investment
operations of the Funds as well as other investment portfolios that encompass a broad range of investment
objectives, and has agreed to perform or arrange for the performance of the Funds' day-to-day management.
The Adviser, as successor in interest to multiple investment advisers, has been an investment adviser
since 1976. Invesco Advisers, Inc. is an indirect, wholly-owned subsidiary of Invesco Ltd. Invesco Ltd.
and its subsidiaries are an independent global investment management group. Certain of the directors and officers
of Invesco are also executive officers of the Trust and their affiliations are shown under “Management Information” herein.
As investment adviser, Invesco supervises all aspects of the Funds' operations and
provides investment advisory services to the Funds. Invesco obtains and evaluates economic, statistical
and financial information to formulate and implement investment programs for the Funds. The Master Investment
Advisory Agreement (Advisory Agreement) provides that, in fulfilling its responsibilities, Invesco may
engage the services of other investment managers with respect to one or more of the Funds. The investment advisory
services of Invesco are not exclusive and Invesco is free to render investment advisory services to others,
including other investment companies.
Pursuant to an administrative services agreement with the Funds, Invesco is also responsible
for furnishing to the Funds, at Invesco’s expense, the services of persons believed to be competent to perform all supervisory and administrative services required by the Funds, which in the judgment
of the trustees, are necessary to conduct the business of the Funds effectively, as well as the offices,
equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund’s accounts and records, and the preparation of all requisite corporate documents such as tax returns
and reports to the SEC and shareholders.
The Advisory Agreement provides that each Fund will pay or cause to be paid all expenses
of such Fund not assumed by Invesco, including, without limitation: brokerage commissions, taxes,
legal, auditing or governmental fees, custodian, transfer and shareholder service agent costs, expenses
of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares
for sale, expenses relating to trustee and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each
Fund in connection with membership in investment company organizations, and the cost of printing copies of
prospectuses and statements of additional information distributed to the Funds' shareholders.
Invesco, at its own expense, furnishes to the Trust office space and facilities. Invesco
furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of
shares.
Pursuant to its Advisory Agreement with the Trust, Invesco receives a monthly fee
from each Fund calculated at the annual rates indicated in the second column below, based on the
average daily net assets of each Fund during the year. Each Fund allocates advisory fees to a class based on the
relative net assets of each class.
|
Fund Name
|
Annual Rate/Net Assets Per Advisory
Agreement
|
|
Invesco Corporate Bond Fund
|
|
|
|
First $500 million 0.42%
|
|
|
Next $750 million 0.35%
|
|
|
Over $1.25 billion 0.22%
|
|
|
|
|
Invesco Global Real Estate Fund
|
|
|
|
First $250 million 0.75%
|
|
|
Next $250 million 0.74%
|
|
|
Next $500 million 0.73%
|
102
|
Fund Name
|
Annual Rate/Net Assets Per Advisory
Agreement
|
|
|
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%
|
|
|
|
|
Invesco Government Money Market Fund
|
|
|
|
All Assets 0.15%
|
|
|
|
|
Invesco High Yield Fund
|
Prior to July 1, 2024
|
|
|
First $200 million 0.625%
|
|
|
Next $300 million 0.55%
|
|
|
Next $500 million 0.50%
|
|
|
Over $1 billion 0.45%
|
|
|
|
|
|
Effective July 1, 2024
|
|
|
First $200 million 0.625%
|
|
|
Next $300 million 0.55%
|
|
|
Next $500 million 0.50%
|
|
|
Next $4 billion 0.45%
|
|
|
Over $5 billion 0.43%
|
|
|
|
|
Invesco Income Fund
|
|
|
|
First $200 million 0.50%
|
|
|
Next $300 million 0.40%
|
|
|
Next $500 million 0.35%
|
|
|
Next $19.5 billion 0.30%
|
|
|
Over $20.5 billion 0.24%
|
|
|
|
|
Invesco Intermediate Bond Factor Fund
|
|
|
|
First $2 billion 0.25%
|
|
|
Over $2 billion 0.23%
|
|
|
|
|
Invesco Real Estate Fund
|
|
|
|
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%
|
|
|
|
|
Invesco Short Duration Inflation Protected Fund
|
|
|
|
First $500 million 0.20%
|
|
|
Over $500 million 0.175%
|
|
|
|
|
Invesco Short Term Bond Fund
|
|
|
|
First $500 million 0.35%
|
|
|
Next $500 million 0.325%
|
103
|
Fund Name
|
Annual Rate/Net Assets Per Advisory
Agreement
|
|
|
Next $1.5 billion 0.30%
|
|
|
Next $2.5 billion 0.29%
|
|
|
Over $5 billion 0.28%
|
|
|
|
|
Invesco U.S. Government Money Portfolio*
|
|
|
|
First $500 million 0.45%
|
|
|
Next $500 million 0.425%
|
|
|
Next $500 million 0.40%
|
|
|
Next $1.5 billion 0.375%
|
|
|
Over $3 billion 0.35%
|
* The advisory fee payable by the Fund shall be reduced by any amounts paid by the
Fund under the administrative services
agreement with Invesco.
Invesco may from time to time waive or reduce its fee. Voluntary fee waivers or reductions
may be rescinded at any time without further notice to investors. During periods of voluntary
fee waivers or reductions, Invesco will retain its ability to be reimbursed for such fee prior to the end of
each fiscal year.
Invesco has contractually agreed through at least June 30, 2025, to waive advisory
fees payable by each Fund, as applicable, in an amount equal to 100% of the net advisory fee Invesco receives from the Affiliated
Money Market Funds as a result of each Fund’s investment of uninvested cash in the Affiliated Money Market Funds. See “Description of the Funds and Their Investments and Risks – Investment Strategies and Risks – Other Investments – Other Investment Companies.” If applicable, such contractual fee waivers or reductions are generally set forth in the fee table in each Fund’s prospectus. Unless Invesco continues the fee waiver agreements, they will terminate as indicated above. During their terms, the fee waiver
agreements cannot be terminated or amended to reduce the advisory fee waivers without approval of the Board.
The management fees payable by the Funds, the amounts waived by Invesco and the net fees paid by the Funds
are found in Appendix G.
For Funds that have expense limitations (“Expense Limitations”) or boundary limits (“Boundary Limits”), as applicable, Invesco has agreed until at least the expiration date (the "Expiration Date") for
the Expense Limitations, or for an indefinite period until further notice to the Board of Trustees for the Boundary
Limits, that Invesco will waive its fees or reimburse expenses to the extent that expenses of the
applicable class of the applicable Fund (excluding (i) interest; (ii) taxes; (iii) dividend expense on short
sales; (iv) extraordinary or non-routine items, including litigation expenses; and (v) expenses that each Fund
has incurred but did not actually pay because of an expense offset arrangement, if applicable) exceed the Expense
Limitation or Boundary Limit rate, on an average of the daily net assets allocable to such class
on an annualized basis. (It should be noted that Acquired Fund Fees and Expenses are not operating expenses of
the Funds directly, but are fees and expenses, including management fees, of the investment companies in which
the Funds invest. As a result, the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement may exceed a Fund’s expense limit.)
Expense Limitations. Neither the Trust nor Invesco may remove or amend the Expense Limitations to a Fund's detriment prior to the Expiration Date without requesting and receiving the
approval of the Board of Trustees of the applicable Fund. Invesco does not have any right to reimbursement
of any amount so waived or reimbursed. For the Expense Limitations, Invesco will review the then-current Expense
Limitations for any Fund prior to the Expiration Date to determine whether such limitations should be
amended, continued or terminated. The Expense Limitations will expire upon the Expiration Date unless Invesco agrees to continue them. These Expense Limitations are set forth in the Expense Limitations table below.
Boundary Limits. From time to time, Invesco may establish amend and/or terminate Boundary Limits
at any time in its sole discretion. Invesco will inform the Board of Trustees of any
such changes. These Boundary Limits are set forth in the Boundary Limits table below.
104
Expense Limitations
|
Fund
|
Annual Rate/Net Assets Per Expense Limitation
Agreement
|
Expiration Date
|
|
Invesco Intermediate Bond Factor Fund
|
|
|
|
Class A Shares
|
0.52%
|
June 30, 2024
|
|
Class C Shares
|
1.27%
|
June 30, 2024
|
|
Class R Shares
|
0.77%
|
June 30, 2024
|
|
Class Y Shares
|
0.27%
|
June 30, 2024
|
|
Class R5 Shares
|
0.27%
|
June 30, 2024
|
|
Class R6 Shares
|
0.27%
|
June 30, 2024
|
|
|
|
|
|
Invesco Short Duration Inflation Protected Fund
|
|
|
|
Class A Shares
|
0.55%
|
June 30, 2024
|
|
Class A2 Shares
|
0.45%
|
June 30, 2024
|
|
Class Y Shares
|
0.30%
|
June 30, 2024
|
|
Class R5 Shares
|
0.30%
|
June 30, 2024
|
|
Class R6 Shares
|
0.30%
|
June 30, 2024
|
|
|
|
|
|
Invesco U.S. Government Money Portfolio
|
|
|
|
Invesco Cash Reserve Shares
|
0.73%
|
June 30, 2024
|
|
Class C Shares
|
1.58%
|
June 30, 2024
|
|
Class R Shares
|
1.08%
|
June 30, 2024
|
|
Class Y Shares
|
0.58%
|
June 30, 2024
|
|
Class R6 Shares
|
0.48%
|
June 30, 2024
|
Boundary Limits
|
Fund
|
Limit Applicable to each Fund
|
|
Invesco Global Real Estate Fund
|
Class A: 2.00%
|
|
Invesco Real Estate Fund
|
Class C: 2.75%
|
|
|
Class R: 2.25%
|
|
|
Class R5: 1.75%
|
|
|
Class R6: 1.75%
|
|
|
Class Y: 1.75%
|
|
|
Investor: 2.00%
|
|
|
|
|
Fund
|
Limit Applicable to each Fund
|
|
Invesco Corporate Bond Fund
|
Class A: 1.50%
|
|
Invesco Government Money Market Fund1
|
Class AX: 1.40%
|
|
Invesco High Yield Fund
|
Class C: 2.25%
|
|
Invesco Income Fund
|
Class CX: 2.15%
|
|
Invesco Short Term Bond Fund2
|
Class R: 1.75%
|
|
|
Class R5: 1.25%
|
|
|
Class R6: 1.25%
|
|
|
Class Y: 1.25%
|
|
|
Investor: 1.50%
|
|
|
Cash Reserve: 1.40%
|
105
|
Fund
|
Limit Applicable to each Fund
|
|
|
|
1
Invesco Government Money Market Fund expense limit for Class A, C, R, and Investor
Class are 1.45%, 2.00%, 1.65%, and 1.25%, respectively.
2
Invesco Short Term Bond expense limit for Class A and C is 1.40% and 1.75% respectively.
The Class C expense limit shown is the expense limit after Rule 12b-1 fee waivers by Invesco Distributors, Inc.
Investment Sub-Advisers
Invesco has entered into a Sub-Advisory Agreement with certain affiliates to serve
as sub-advisers to each Fund (each, a Sub-Adviser), pursuant to which these affiliated sub-advisers may
be appointed by Invesco from time to time to provide discretionary investment management services,
investment advice, and/or order execution services to the Funds. These affiliated sub-advisers, each
of which is a registered investment adviser under the Advisers Act are:
●
Invesco Asset Management (Japan) Limited (Invesco Japan)
●
Invesco Asset Management Deutschland GmbH (Invesco Deutschland)
●
Invesco Asset Management Limited (Invesco Asset Management)
●
Invesco Canada Ltd. (Invesco Canada)
●
Invesco Hong Kong Limited (Invesco Hong Kong)
●
Invesco Senior Secured Management, Inc. (Invesco Senior Secured)
Invesco has also entered into a Sub-Advisory Agreement with another affiliate, Invesco
Capital Management LLC (Invesco Capital), also a registered investment adviser under the Advisers
Act, to provide discretionary investment management services, investment advice, and/or order execution
services to Invesco Global Real Estate Fund, Invesco High Yield Fund, Invesco Intermediate Bond Factor Fund and Invesco U.S. Government Money Portfolio.
Invesco has also entered into a Sub-Advisory Agreement with another affiliate, Invesco
Asset Management (India) Private Limited (Invesco India), also a registered investment adviser
under the Advisers Act, to provide discretionary investment management services, investment advice, and/or
order execution services to Invesco Global Real Estate Fund, Invesco High Yield Fund, Invesco Intermediate Bond Factor Fund and Invesco U.S. Government Money Portfolio.
The only fees payable to the Sub-Advisers described above under the Sub-Advisory Agreements
are for providing discretionary investment management services. For such services, Invesco
will pay each Sub-Adviser a fee, computed daily and paid monthly, equal to (i) 40% of the monthly compensation
that Invesco receives from the Trust, multiplied by (ii) the fraction equal to the net assets of
such Fund as to which such Sub-Adviser shall have provided discretionary investment management services for that
month divided by the net assets of such Fund for that month. Pursuant to the Sub-Advisory Agreement, this
fee is reduced to reflect contractual or voluntary fee waivers or expense limitations by Invesco, if any, in
effect from time to time. In no event shall the aggregate monthly fees paid to the Sub-Advisers under the Sub-Advisory
Agreement exceed 40% of the monthly compensation that Invesco receives from the Trust pursuant to its
advisory agreement with the Trust, as reduced to reflect contractual or voluntary fee waivers or expense
limitations by Invesco, if any.
Invesco has also entered into a Sub-Advisory Agreement with another affiliate, OppenheimerFunds,
Inc. also a registered investment adviser under the Advisers Act, to provide discretionary
investment management services, investment advice, and/or order execution services to Invesco Intermediate Bond Factor Fund and Invesco U.S. Government Money Portfolio. Under the sub-advisory agreement, the Adviser
pays the Sub-Adviser a percentage of the net investment advisory fee (after all applicable waivers) that
it receives from the Fund as compensation for the provision of investment advisory services. The fee paid
to the Sub-Adviser under the Sub-Advisory Agreement is paid by the Adviser, not by the Fund.
106
Invesco and each Sub-Adviser are indirect wholly-owned subsidiaries of Invesco Ltd.
Service Agreements
Administrative Services Agreement. Invesco and the Trust have entered into a Master Administrative Services Agreement (Administrative Services Agreement) pursuant to which Invesco may
perform or arrange for the provision of certain accounting and other administrative services to each
Fund which are not required to be performed by Invesco under the Advisory Agreement. The Administrative Services
Agreement provides that it will remain in effect and continue from year to year only if such continuance
is specifically approved at least annually by the Board, including the independent trustees. Under the Administrative
Services Agreement, Invesco is entitled to receive from the Funds reimbursement of its costs
or such reasonable compensation. For Invesco U.S. Government Money Portfolio, the advisory fee payable
shall be reduced by any amounts paid by the Fund under the Administrative Services Agreement. Currently,
Invesco is reimbursed for the services of the Trust’s principal financial officer and the principal financial officer's staff and any expenses related to fund accounting services.
Pursuant to a subcontract for administrative services with the Adviser, State Street
Bank and Trust Company performs certain administrative functions for the Funds. State Street Bank
and Trust Company is located at 225 Franklin Street, Boston, Massachusetts 02110-2801.
Administrative services fees paid to Invesco by each Fund for the last three fiscal
years or periods, as applicable, ended February 28 or 29 are found in Appendix I.
Other Service Providers
Transfer Agent. Invesco Investment Services, Inc., (Invesco Investment Services), 11 Greenway Plaza,
Houston, Texas 77046-1173, a wholly-owned subsidiary of Invesco, Ltd. is the Trust’s transfer agent.
The Amended and Restated Transfer Agency and Service Agreement (the TA Agreement)
between the Trust and Invesco Investment Services provides that Invesco Investment Services will
perform certain services related to the servicing of shareholders of the Funds. Other such services
may be delegated or sub-contracted to third party intermediaries. For servicing accounts holding Class A, A2, AX, C,
CX, P, R, RX, S, Y, Invesco Cash Reserve and Investor Class shares, as applicable, the TA Agreement provides
that the Trust, on behalf of the Funds, will pay Invesco Investment Services an annual fee per open shareholder
account. This fee is paid monthly at the rate of 1/12 of the annual rate and is based upon the number
of open shareholder accounts during each month. For servicing accounts holding Class R5 and Class R6 shares,
as applicable, the TA Agreement provides that the Trust, on behalf of the Funds, will pay Invesco
Investment Services an asset-based fee. The TA Agreement also provides that Invesco Investment Services is
responsible for out of pocket expenses relating to the procurement of goods and services as they relate to
its obligations under the TA Agreement. In addition, all fees payable by Invesco Investment Services or its
affiliates to third party intermediaries who service accounts pursuant to sub-transfer agency, omnibus account
services and sub-accounting agreements are charged back to the Funds, subject to certain limitations approved
by the Board of the Trust as reflected in Board-approved policies. These payments are made in consideration
of services that would otherwise be provided by Invesco Investment Services if the accounts serviced
by such intermediaries were serviced by Invesco Investment Services directly. For more information regarding
such payments to intermediaries, see the discussion under “Sub-Accounting and Networking Support Payments” found in Appendix L.
Sub-Transfer Agent. Invesco Canada, 120 Bloor Street East, Suite 700, Toronto, Ontario, Canada M4W 1B7, a wholly-owned, indirect subsidiary of Invesco Ltd., provides services to the
Trust as a sub-transfer agent, pursuant to an agreement between Invesco Canada and Invesco Investment Services.
The Trust does not pay a fee to Invesco Canada for these services. Rather Invesco Canada is compensated
by Invesco Investment Services, as a sub-contractor.
In addition, Invesco (India) Private Limited, Divyasree Orion, B6 15TH FLOOR, Raidurgam,
Serilingampalli, Hyderabad, India K7 500032, a wholly-owned, indirect subsidiary of
Invesco Ltd., provides services to the Trust as a sub-transfer agent, pursuant to an agreement between Invesco
(India) Private
107
Limited and Invesco Investment Services. The Trust does not pay a fee to Invesco (India)
Private Limited and Invesco Investment Services. Rather Invesco (India) Private Limited is compensated
by Invesco Investment Services, as a sub-contractor.
Custodian
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
is custodian of all securities and cash of the Funds except with respect to Invesco Government Money
Market Fund and Invesco U.S. Government Money Portfolio.
The Bank of New York Mellon, 2 Hanson Place, Brooklyn, New York 11217-1431, is custodian
of all securities and cash of Invesco Government Money Market Fund and Invesco U.S. Government
Money Portfolio.
The Custodian and sub-custodian are authorized to establish separate accounts in foreign
countries and to cause foreign securities owned by the Funds to be held outside the United States
in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks
and securities depositories. Invesco is responsible for selecting eligible foreign securities depositories
and for assessing the risks associated with investing in foreign countries, including the risk of using eligible foreign securities’ depositories in a country. The Custodian is responsible for monitoring eligible foreign
securities depositories.
Under its contract with the Trust, the Custodian maintains the portfolio securities
of the Funds, administers the purchases and sales of portfolio securities, collects interest and
dividends and other distributions made on the securities held in the portfolios of the Funds and performs
other ministerial duties. These services do not include any supervisory function over management or provide
any protection against any possible depreciation of assets.
Independent Registered Public Accounting Firm. The Funds' independent registered public accounting firm is responsible for auditing the financial statements of the Funds.
The Audit Committee of the Board has selected, and the Board has ratified and approved PricewaterhouseCoopers
LLP, 1000 Louisiana Street, Suite 5800, Houston, Texas 77002-5021, as the independent registered public
accounting firm to audit the financial statements of the Funds. In connection with the audit of the Funds'
financial statements, the Funds entered into an engagement letter with PricewaterhouseCoopers LLP. The terms
of the engagement letter required by PricewaterhouseCoopers LLP, and agreed to by the Funds' Audit Committee,
include a provision mandating the use of mediation and arbitration to resolve any controversy
or claim between the parties arising out of or relating to the engagement letter or the services provided
thereunder. Financial statements for the predecessor fund for periods ending on or prior to May 24, 2019
were audited by the predecessor fund’s auditor, KPMG LLP, an independent registered public accounting firm, which is different than the Funds’ auditor.
Counsel to the Trust. Legal matters for the Trust have been passed upon by Stradley Ronon Stevens & Young, LLP, 2005 Market Street, Suite 2600, Philadelphia, Pennsylvania 19103-7018.
Securities Lending Arrangements
As discussed under “Lending Portfolio Securities” the Funds may lend their portfolio securities to generate additional income. Certain Funds may participate in a securities lending program pursuant
to a securities lending agreement that establishes the terms of the loan, including collateral requirements.
The Funds participating in the securities lending program may lend securities to securities
brokers and other borrowers.
Under the securities lending program, Bank of New York Mellon (BNY Mellon) served
as a securities lending agent for certain of the Funds’ most recently completed fiscal year. The Board also appointed Invesco to serve as an affiliated securities lending agent for the Funds under the securities
lending program. Invesco served as an affiliated securities lending agent for the Funds' most recently completed
fiscal year, as listed in the table below (as applicable).
To the extent a Fund utilizes Invesco as an affiliated securities lending agent, the
Fund conducts its securities lending in accordance with and in reliance upon no-action letters issued
by the SEC staff that
108
provide guidance on how an affiliate may act as a direct agent lender and receive
compensation for those services without obtaining exemptive relief. The Board has approved policies and procedures
that govern a Fund's securities lending activities when utilizing an affiliated securities lending
agent, such as Invesco, consistent with the guidance set forth in the no-action letters.
Invesco serves as a securities lending agent to other clients in addition to the Funds.
There are potential conflicts of interests involved in the Funds’ use of Invesco as an affiliated securities lending agent, including but not limited to: (i) Invesco as securities lending agent may have an incentive
to increase or decrease the amount of securities on loan, lend particular securities, delay or forgo calling securities
on loans, or lend securities to less creditworthy borrowers, in order to generate additional fees for
Invesco and its affiliates; and (ii) Invesco as securities lending agent may have an incentive to allocate loans to
clients that would provide more fees to Invesco. Invesco seeks to mitigate these potential conflicts of interest
by utilizing a methodology designed to provide its securities lending clients with equal lending opportunities
over time.
For the fiscal year ended February 29, 2024, the income earned by the Funds, as well as the fees and/or compensation paid by the Funds (in dollars) pursuant to a securities lending agency/authorization
agreement between the Trust, with respect to the Funds, and BNY Mellon, were as follows:
|
|
Gross
income
from
securities
lending
activities
|
Fees paid
to
Securities
Lending
Agent
from a
revenue
split
|
Fees paid for
any cash
collateral
management
service
(including
fees
deducted
from a
pooled cash
collateral
reinvestment
vehicle) not
included in
the revenue
split
|
Administrative
fees not
included in
the
revenue split
|
Indemnification
fees not
included in
the
revenue split
|
Rebate
(paid to
borrower)
|
Other
fees not
included
in the
revenue
split
|
Aggregate
fees/
compensation
for securities
lending
activities
|
Net income
from
securities
lending
activities
|
|
Invesco Corporate
Bond Fund
|
$21,476,166.60
|
$111,094.75
|
$394,110.00
|
$0.00
|
$0.00
|
$19,970,673.80
|
$0.00
|
$20,475,878.55
|
$1,000,288.05
|
|
Invesco Global Real
Estate Fund
|
29,860.04
|
148.71
|
7,317.00
|
0.00
|
0.00
|
21,054.85
|
0.00
|
28,520.56
|
1,339.48
|
|
Invesco High Yield
Fund
|
10,323.12
|
143.62
|
1,503.00
|
0.00
|
0.00
|
7,383.51
|
0.00
|
9,030.13
|
1,292.99
|
|
Invesco Income Fund
|
55,705.09
|
193.16
|
1,021.00
|
0.00
|
0.00
|
52,751.76
|
0.00
|
53,965.92
|
1,739.17
|
|
Invesco Intermediate
Bond Factor Fund
|
142,514.95
|
5,077.71
|
2,625.00
|
0.00
|
0.00
|
89,105.96
|
0.00
|
96,808.67
|
45,706.28
|
|
Invesco Real Estate
Fund
|
734,526.99
|
2,319.55
|
43,360.00
|
0.00
|
0.00
|
667,962.75
|
0.00
|
713,642.30
|
20,884.69
|
|
Invesco Short Term
Bond Fund
|
7,477,805.11
|
23,410.91
|
137,042.00
|
0.00
|
0.00
|
7,106,518.67
|
0.00
|
7,266,971.58
|
210,833.53
|
For the fiscal year ended February 29, 2024, BNY Mellon provided the following services for the Funds in connection with securities lending activities: (i) entering into loans with approved
entities subject to guidelines or restrictions provided by the Funds; (ii) negotiating loan terms; (iii) receiving
collateral from borrowers; (iv) collecting distributions from borrowers and crediting such distributions to the custodial
account; (v) collecting securities loan fees and crediting them to the collateral account; (vi) terminating
loans in its reasonable discretion or as directed by the Funds; (vii) effecting currency conversion transactions;
(viii) investing and reinvesting cash collateral; (ix) maintaining books and records; and (x) acting as the Funds’ agent in connection with all aspects of (including establishment, maintenance, perfection,
administration, performance of and realization upon) the security interest in, and lien and charge upon, the collateral.
109
For the fiscal year ended February 29, 2024, the income earned by the Funds, as well as the fees and/or compensation paid by the Funds (in dollars) to Invesco pursuant to the affiliated
securities lending agreement were as follows:
|
|
Gross
income
from
securities
lending
activities
|
Fees paid
to
Securities
Lending
Agent
from a
revenue
split*
|
Fees paid for
any cash
collateral
management
service
(including
fees
deducted
from a
pooled cash
collateral
reinvestment
vehicle) not
included in
the revenue
split
|
Administrative
fees not
included in
the
revenue split
|
Indemnification
fees not
included in
the
revenue split
|
Rebate
(paid to
borrower)
|
Other
fees not
included
in the
revenue
split
|
Aggregate
fees/
compensation
for securities
lending
activities
|
Net income
from
securities
lending
activities
|
|
Invesco Corporate
Bond Fund
|
$12,708.71
|
$414.96
|
$0.00
|
$1,660.90
|
$0.00
|
$(9,280.38)
|
$0.00
|
$(7,204.52)
|
$19,913.23
|
|
Invesco Global Real
Estate Fund
|
370,375.87
|
209.55
|
0.00
|
841.32
|
0.00
|
359,320.74
|
0.00
|
360,371.61
|
10,004.26
|
|
Invesco High Yield
Fund
|
69,988.47
|
766.69
|
0.00
|
3,067.58
|
0.0
|
30,915.01
|
0.00
|
34,749.28
|
35,239.19
|
|
Invesco Income Fund
|
670.41
|
36.92
|
0.00
|
147.78
|
0.00
|
(1,182.09)
|
0.00
|
(997.39)
|
1,667.80
|
|
Invesco Real Estate
Fund
|
1,661,680.29
|
1,174.61
|
0.00
|
4,702.54
|
0.00
|
1,601,609.76
|
0.00
|
1,607,486.91
|
54,193.38
|
|
Invesco Short Term
Bond Fund
|
29.09
|
2.27
|
0.00
|
9.15
|
0.00
|
(85.20)
|
0.00
|
(73.78)
|
102.87
|
*Paid to BNY Mellon.
Further, for the fiscal year ended February 29, 2024, Invesco provided the following services for the Funds in connection with affiliated securities lending activities: (i) identify available
loan opportunities, (ii) negotiate loan terms; (iii) enter into loans with prime brokers subject to guidelines
or restrictions provided by the Funds; (iv) input loan details into the securities lending platform; (v) monitor
daily reports and data files of loan details to ensure compliance with applicable policies and requirements or restrictions
of the securities lending program; (vi) monitor re-rate surveillance reports; (vii) re-negotiate loan
rates and re-allocate or recall securities where necessary; and (viii) provide quarterly reports to the Securities
Lending Governance Committee and to the Board on information required by Invesco’s policies and procedures for affiliated securities lending.
In addition, the Advisory Agreement describes administrative services to be rendered
by Invesco under such Advisory Agreement if a Fund engages in securities lending activities, as well
as the compensation Invesco may receive for such administrative services. Services to be provided include,
where applicable: (a) overseeing participation in the securities lending program to ensure compliance with
all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal
in determining which specific securities are available for loan; (c) monitoring the securities lending agent to
ensure that securities loans are effected in accordance with Invesco’s instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board
with respect to securities lending activities; (e) responding to securities lending agent inquiries; and (f)
performing such other duties as may be necessary. Invesco also monitors the creditworthiness of the securities lending
agent and borrowers to ensure that securities loans are effected in accordance with Invesco’s risk policies. The Advisory Agreement authorizes Invesco to receive a separate fee equal to 25% of the net monthly
interest or fee income retained or paid to the Funds for the administrative services that Invesco
renders in connection with securities lending. Invesco has contractually agreed, however, not to charge this
fee under the Advisory Agreement and to obtain Board approval prior to charging such a fee in the future.
110
Portfolio Managers
Appendix H contains the following information regarding the portfolio managers identified in each Fund’s Prospectus:
●
The dollar range of the managers’ investments in each Fund.
●
A description of the managers’ compensation structure.
●
Information regarding other accounts managed and potential conflicts of interest that
might arise from the management of multiple accounts.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Invesco and the Sub-Advisers have adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. If all or a portion of a Fund’s assets are managed by one or more Sub-Advisers, the decision to buy and sell securities and broker-dealer selection will be made by the Sub-Adviser for the assets it manages. Unless specifically noted, the Sub-Advisers’ brokerage allocation procedures do not materially differ from Invesco’s procedures.
As discussed below, Invesco and the Sub-Advisers, unless prohibited by applicable
law, may cause a Fund to pay a broker-dealer a commission for effecting a transaction that exceeds
the amount another broker-dealer would have charged for effecting the same transaction in recognition
of the value of brokerage and research services provided by that broker-dealer. Since January 3, 2018, under the European Union’s Markets in Financial Instruments Directive (MiFID II) and as implemented in the United Kingdom, European Union and United Kingdom investment advisers, including Invesco Deutschland and Invesco Asset Management, which may act as sub-adviser to certain Funds as described in such Funds' prospectuses, pay for research from broker-dealers directly out of their own resources, rather than
through client commissions.
Brokerage Transactions
Placing trades generally involves acting on portfolio manager instructions to buy
or sell a specified amount of portfolio securities, including selecting one or more broker-dealers, including
affiliated and third-party broker-dealers, to execute the trades, and negotiating commissions and spreads. Various
Invesco Ltd. subsidiaries have created a global equity trading desk. The global equity trading
desk has assigned local traders in primary trading centers around the world to place equity securities trades in their regions. Invesco’s Americas desk, with locations in the United States and Canada (the Americas Desk), generally places trades of equity securities trading in North America, Canada and Latin America; the Asia Pacific desk, with locations in Hong Kong, Japan, Australia and China (the Asia Pacific Desk), generally places trades of equity securities trading in the Asia-Pacific markets; and the EMEA trading desk, with locations in the United Kingdom (the EMEA Desk), generally places trades of equity securities trading in European, Middle Eastern and African countries. Additionally, various Invesco Ltd. subsidiaries have created an alternatives trading desk that generally places trades in derivatives, options and foreign currency. Invesco, Invesco Canada, Invesco Japan, Invesco Deutschland, Invesco Hong Kong, Invesco Capital and Invesco Asset Management
use the global equity trading desk and the alternatives desk to place trades. Other Sub-Advisers may use the global equity trading desk and the alternatives desk in the future. The trading procedures for the global trading desks are similar in all material respects.
References in the language below to actions by Invesco or a Sub-Adviser making determinations
or taking actions related to equity trading include these entities’ delegation of these determinations/actions to the Americas Desk, the Asia Pacific Desk, and the EMEA Desk. Even when trading is delegated by Invesco or the Sub-Advisers to the various arms of the global equity trading desk or to the alternatives desk, Invesco or the Sub-Adviser that delegates trading is responsible for oversight of this trading activity.
Commissions
Invesco or the Sub-Advisers make decisions to buy and sell securities for each Fund,
select broker-dealers (each, a Broker), effect the Funds’ investment portfolio transactions, allocate brokerage fees in such
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transactions and, where applicable, negotiate commissions and spreads on transactions. Invesco’s and the Sub-Advisers’ primary consideration in effecting a security transaction is to obtain best execution for a Fund such that the Fund’s total cost or proceeds in each transaction is the most favorable under the circumstances,
including commissions, mark-ups or mark-downs which are reasonable in relation to the value
of the research and brokerage services provided by the Broker. While Invesco and the Sub-Advisers seek reasonably competitive commission rates, the Funds may not pay the lowest commission or spread
available. See “Broker Selection” below.
Some of the securities in which the Funds invest, such as fixed income securities, are traded in OTC markets. Portfolio transactions in such markets may be effected on a principal basis
at net prices without commissions, but which include compensation to the Broker in the form of a mark-up
or mark-down, or on an agency basis, which involves the payment of negotiated brokerage commissions to the
Broker. Purchases of underwritten issues, which include initial public offerings and secondary offerings,
include a commission or concession paid by the issuer (not the Funds) to the underwriter. Purchases of money
market instruments may be made directly from issuers without the payment of commissions.
The Funds may engage in certain principal and agency transactions with banks and their
affiliates that own 5% or more of the outstanding voting securities of a Fund, provided the conditions of an exemptive order received by the Invesco Funds from the SEC are met. In addition, a Fund may purchase
or sell a security from or to certain other Invesco Funds or other client accounts managed by Invesco or a Sub-Adviser (and may invest in the Affiliated Money Market Funds) provided the Funds follow procedures
adopted by the Boards of the various Invesco Funds, including the Trust. These inter-fund transactions
generally do not generate brokerage commissions but may result in custodial fees or taxes or other
related expenses.
Brokerage commissions paid by each of the Funds during the last three fiscal years
ended February 28 or 29 are found in Appendix J.
Broker Selection
Invesco’s or the Sub-Advisers’ primary consideration in selecting Brokers to execute portfolio transactions for a Fund is to obtain best execution. In selecting a Broker to execute a portfolio
transaction in equity or fixed income securities for a Fund, Invesco or the Sub-Advisers consider the full range and quality of a Broker’s services, including, but not limited to, the value of research and/or brokerage services provided (if permitted by applicable law or regulation), execution capability, commission rate, spread or mark-up or mark-down (as applicable), willingness to commit capital, anonymity and responsiveness. In each case, the determinative factor is not the lowest commission, spread or mark-up or mark-down available but whether the transaction represents the best qualitative execution for the Fund under the circumstances. Invesco and the Sub-Advisers will not select Brokers based upon their promotion or sale of Fund shares.
Unless prohibited by applicable law, such as MiFID II (described herein), in choosing
Brokers to execute portfolio transactions for the Funds, Invesco or a Sub-Adviser may select Brokers that provide brokerage and/or research services (Soft Dollar Products) to Invesco or such Sub-Adviser. For the avoidance of doubt, European Union and United Kingdom investment advisers, including Invesco Deutschland and Invesco Asset Management, which may act as sub-adviser to certain Invesco Funds as described in such Funds’ prospectuses, must pay for research from Brokers directly out of their own resources, rather than through client commissions. Therefore, the use of the defined term “Sub-Advisers” throughout this section shall not be deemed to apply to those Sub-Advisers subject to the MiFID II prohibitions. Section
28(e) of the Exchange Act, provides that Invesco or a Sub-Adviser, under certain circumstances, lawfully may cause a client account to pay a higher commission than the lowest available. Under Section 28(e)(1), Invesco
or the Sub-Adviser must make a good faith determination that the commissions paid are “reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular
transaction or [Invesco’s or the Sub-Adviser’s] overall responsibilities with respect to the accounts as to which [it] exercises
investment discretion.” The Soft Dollar Products provided by the Broker also must lawfully and appropriately assist Invesco or the Sub-Adviser in the performance of its investment decision-making responsibilities.
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Accordingly, a Fund may pay a Broker commissions that are higher than those charged by another Broker in recognition of the Broker’s provision of Soft Dollar Products to Invesco or the Sub-Advisers.
Invesco and the Sub-Advisers face a potential conflict of interest when they use client
trades to obtain Soft Dollar Products. This conflict exists because Invesco and the Sub-Advisers are
able to use the Soft Dollar Products to manage client accounts without paying cash for the Soft Dollar
Products, which reduces Invesco’s or a Sub-Adviser’s expenses to the extent that Invesco or such Sub-Adviser would have purchased such products had they not been provided by Brokers. Additionally, Section 28(e) permits Invesco or a Sub-Adviser to use Soft Dollar Products for the benefit of any account it manages. Certain Invesco-managed
client accounts (or client accounts managed by the Sub-Advisers) may generate soft dollar commissions used to purchase Soft Dollar Products that ultimately benefit other Invesco-managed client accounts (or the other Sub-Adviser managed accounts), effectively cross-subsidizing the other Invesco-managed client accounts (or the other Sub-Adviser-managed client accounts) that benefit directly from the product. Invesco or a Sub-Adviser may not use all of the Soft Dollar Products provided by Brokers through which a Fund
effects securities transactions in connection with managing the Fund whose trades generated
the soft dollar commissions used to purchase such products.
Fixed income trading normally does not generate soft dollar commissions to pay for Soft Dollar Products. Therefore, soft dollar commissions used to pay for Soft Dollar Products which are
used to manage certain fixed income Invesco Funds or other fixed-income client accounts are generated entirely by equity-focused Invesco Funds and other equity-focused client accounts managed by Invesco. In other words, certain fixed income Invesco Funds are cross-subsidized by the equity Invesco Funds in that the
fixed income Invesco Funds receive the benefit of Soft Dollar Products for which they do not pay. Similarly, other client accounts managed by Invesco or certain of its affiliates may benefit from Soft Dollar Products
for which they do not pay.
Invesco and the Sub-Advisers attempt to reduce or eliminate the potential conflicts
of interest concerning the use of Soft Dollar Products by directing client trades for Soft Dollar Products
only if Invesco or the Sub-Adviser concludes that the Broker supplying the product is capable of providing best execution.
Certain Soft Dollar Products may be available directly from a vendor on a hard dollar
basis; other Soft Dollar Products are available only through Brokers in exchange for soft dollars. Invesco
and the Sub-Adviser use soft dollar commissions to purchase two types of Soft Dollar Products:
●
proprietary research created by the Broker executing the trade, and
●
other research and brokerage products and services created by third party vendors that are supplied to Invesco or the Sub-Advisers through the Broker executing the trade.
Proprietary research consists primarily of traditional research reports, recommendations
and similar materials produced by the in-house research staffs of broker-dealer firms. This research
includes evaluations and recommendations of specific companies or industry groups, as well as analyses
of general economic and market conditions and trends, market data, contacts and other related information
and assistance. Invesco periodically rates the quality of proprietary research produced by various Brokers.
Based on the evaluation of the quality of information that Invesco receives from each Broker, Invesco develops
an estimate of each Broker’s targeted share of Invesco clients’ commission dollars and attempts to direct trades to these firms to meet these estimates.
Soft Dollar Products are paid for by Invesco and Sub-Advisers using soft dollar commissions through one of two methods: full-service trading or commission sharing agreements (“CSAs”). In a full-service trading arrangement, the Broker itself provides proprietary research products and brokerage services to Invesco or the Sub-Adviser, and commissions paid to the Broker are retained by it to pay for both trade execution and the proprietary research products and brokerage services provided by it. In a CSA arrangement with a Broker, a portion of the commission paid to the Broker is made available by the Broker to Invesco or the Sub-Adviser to pay a third party for third party research and brokerage products and services.
Soft Dollar Products received from Brokers supplement Invesco’s and the Sub-Advisers’ own research (and the research of certain of its affiliates), and may include the following types
of products and services:
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●
Database Services – comprehensive databases containing current and/or historical information on companies and industries and indices. Examples include historical securities prices,
earnings estimates and financial data. These services may include software tools that allow
the user to search the database or to prepare value-added analyses related to the investment process
(such as forecasts and models used in the portfolio management process).
●
Quotation/Trading/News Systems – products that provide real time market data information, such as pricing of individual securities and information on current trading, as well as a
variety of news services.
●
Economic Data/Forecasting Tools – various macroeconomic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
●
Quantitative/Technical Analysis – software tools that assist in quantitative and technical analysis of investment data.
●
Fundamental Company/Industry Analysis – company or industry specific fundamental investment research.
●
Fixed Income Security Analysis – data and analytical tools that pertain specifically to fixed income securities. These tools assist in creating financial models, such as cash flow projections
and interest rate sensitivity analyses, which are relevant to fixed income securities.
●
Other Specialized Tools – other specialized products, such as consulting analyses, access to industry experts, and distinct investment expertise or custom built investment-analysis software.
Occasionally, Invesco or a Sub-Adviser will receive certain “mixed-use” research and brokerage services, a portion of the cost of which is eligible under Section 28(e) for payment with soft dollar commissions and a portion of which is not. In these instances, Invesco or the Sub-Adviser will make a reasonable allocation of the cost of the product or service according to its use and pay for only that portion of the cost that is eligible under Section 28(e) with soft dollar commission (and will pay for the remaining portion with its own resources).
Outside research assistance is useful to Invesco and the Sub-Advisers because the Brokers used by Invesco and the Sub-Advisers and the providers of other Soft Dollar Products tend to provide more in-depth analysis of a broader universe of securities and other matters than Invesco’s or the Sub-Advisers’ staff follow. In addition, such services provide Invesco or the Sub-Advisers with a diverse perspective
on financial markets. In some cases, Soft Dollar Products are available only from the Broker providing them.
In other cases, Soft Dollar Products may be obtainable from alternative sources in return for
cash payments. Invesco and the Sub-Advisers believe that because Broker research supplements rather than replaces Invesco’s or the Sub-Advisers’ research, the receipt of such research tends to improve the quality of Invesco’s or the Sub-Advisers’ investment advice. The advisory fee paid by the Funds is not reduced because Invesco
or the Sub-Advisers receive such services. To the extent the Funds' portfolio transactions are used to
obtain Soft Dollar Products, the brokerage commissions charged to the Funds might exceed those that might otherwise have been paid.
Portfolio transactions may be effected through Brokers that recommend the Funds to
their clients, or that act as agent in the purchase of a Fund’s shares for their clients, provided that Invesco or the Sub-Advisers believe such Brokers provide best execution and such transactions are executed in compliance with Invesco’s policy against using directed brokerage to compensate Brokers for promoting or selling
Invesco Fund shares. Invesco and the Sub-Advisers will not enter into a binding commitment with Brokers
to place trades with such Brokers involving brokerage commissions in precise amounts.
As noted above, under MiFID II, European Union and United Kingdom investment advisers, including Invesco Deutschland and Invesco Asset Management, are not permitted to use soft dollar commissions to pay for research from brokers but rather must pay for research out of their own profit
and loss or have research costs paid by clients through research payment accounts that are funded by a specific
client research charge or the research component of trade orders. Such payments for research must be unbundled
from the
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payments for execution. As a result, Invesco Deutschland and Invesco Asset Management
are restricted from using Soft Dollar Products in managing the Invesco Funds that they sub-advise.
The amount of brokerage commissions paid by the Funds to brokers for providing Section 28(e) research/brokerage services under Section 28(e) of the Exchange Act and the approximate dollar amount of the transactions involved for the last fiscal year or period, as applicable, ended February 28 or 29 are found in Appendix K.
Affiliated Transactions
Invesco or a Sub-Adviser may place trades for equity securities with Invesco Capital Markets, Inc. (ICMI), a broker-dealer with whom it is affiliated, provided that Invesco or the Sub-Adviser determines that ICMI’s trade execution costs are at least comparable to those of non-affiliated brokerage firms with which
Invesco or the Sub-Adviser could otherwise place similar trades for similar securities. ICMI receives brokerage commissions in connection with effecting trades for the Funds and, therefore, use
of ICMI presents a conflict of interest for Invesco or a Sub-Adviser. Trades placed through ICMI, including the brokerage commissions paid to ICMI, are subject to procedures adopted by the Board that are designed to mitigate this conflict of interest.
Information regarding any brokerage commissions on affiliated transactions that the
Funds may have paid for the last three fiscal years or periods, as applicable, ended February 28 or 29
may be found in Appendix J.
Regular Brokers
Information concerning the Funds' acquisition of securities of their brokers during
the last fiscal year or period, as applicable, ended February 28 or 29 is found in Appendix K.
Allocation of Portfolio Transactions
Invesco and the Sub-Advisers manage numerous Invesco Funds and other client accounts. Some of these client accounts may have investment objectives similar to the Funds. Frequently, identical securities will be appropriate for investment by multiple Invesco Funds or other client accounts. However, the position of each client account in the same security and the length of time that each client account may hold its investment in the same security may vary. Invesco or a Sub-Adviser will also determine the timing and amount of purchases for a client account based on its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more other client accounts, and is considered at or about the same time, Invesco or the Sub-Adviser will allocate transactions
in such securities among the Fund(s) and these client accounts on a pro rata basis based on order size or in such other manner believed by Invesco or the Sub-Adviser to be fair and equitable. In determining what is fair and equitable, Invesco or the Sub-Adviser can consider various factors, including how closely the
investment opportunity matches the investment objective and strategy of a Fund or client account, the capital available to a Fund or client account, and which portfolio management team sourced the opportunity. Invesco or the
Sub-Adviser may combine orders for the purchase or sale of securities and other investments for multiple client
accounts, including the Funds, in accordance with applicable laws and regulations to obtain the most favorable execution. Aggregated transactions could, however, adversely affect a Fund’s ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Allocation of Initial Public Offering (IPO) Transactions
Certain of the Invesco Funds or other client accounts managed by Invesco or a Sub-Adviser may become interested in participating in IPOs. Purchases of IPOs by one Invesco Fund or other
client account may also be considered for purchase by one or more other Invesco Funds or client accounts. Invesco combines indications of interest for IPOs for all Invesco Funds and client accounts desiring to purchase the securities to be issued in that IPO. When the full amount of all IPO orders for such Invesco Funds and client accounts cannot be filled completely, Invesco or the Sub-Adviser shall allocate such transactions in accordance with the following procedures.
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Invesco or the Sub-Adviser may determine the eligibility of each Invesco Fund and
client account that seeks to participate in a particular IPO by reviewing a number of factors, including
market capitalization/liquidity suitability and sector/style suitability of the investment with the Invesco Fund’s or client account’s investment objective, policies, strategies and current holdings ,as well as the commitment to or level of interest in the particular issuer by the portfolio managers of such Invesco Fund
or client account. Invesco or the Sub-Adviser will allocate securities issued in IPOs to eligible Invesco Funds and client accounts on a pro rata basis based on order size.
PURCHASE, REDEMPTION, EXCHANGE AND PRICING OF SHARES
Please refer to Appendix L for information on Purchase, Redemption, Exchange and Pricing
of Shares.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
Dividends and Distributions
The following discussion of dividends and distributions should be read in connection
with the applicable sections in the Prospectus.
All dividends and distributions will be automatically reinvested in additional shares
of the same class of a Fund unless the shareholder has requested in writing to receive such dividends and
distributions in cash or that they be invested in shares of another Invesco Fund, subject to the terms and
conditions set forth in the Prospectus under the caption “Purchasing Shares - Automatic Dividend and Distribution Investment.” Such dividends and distributions will be reinvested at the net asset value per share determined
on the ex-dividend date.
The Fund calculates income dividends and capital gain distributions the same way for
each class. The amount of any income dividends per share will differ, however, generally due to any
differences in the distribution and service (Rule 12b-1) fees applicable to the classes, as well as any
other expenses attributable to a particular class (Class Expenses). Class Expenses, including distribution plan
expenses, must be allocated to the class for which they are incurred consistent with applicable legal
principles under the 1940 Act.
In the event, the Funds incur or anticipate any unusual expense, loss or depreciation
in the value of a portfolio investment that would adversely affect the net asset value per share of
the Fund or the net income per share of a class of the Fund for a particular period, the Board would at that
time consider whether to adhere to the present dividend policy described above or to revise it in light of
then prevailing circumstances. For example, if the net asset value per share of the Fund was reduced, or was anticipated
to be reduced below $1.00, the Board might suspend further dividend payments on shares of the Fund
until the net asset value returns to $1.00. Thus, such expense, loss or depreciation might result in a
shareholder receiving no dividends for the period during which it held shares of the Fund and/or its receiving
upon redemption a price per share lower than that which it paid.
Tax Matters
The following is a summary of certain additional tax considerations generally affecting
the Fund and its shareholders that are not described in the Prospectus. No attempt is made to present
a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussion here and
in the Prospectus is not intended as a substitute for careful tax planning.
This “Tax Matters” section is based on the Code and applicable regulations in effect on the date of this SAI. Future legislative, regulatory or administrative changes, including provisions
of current law that sunset and thereafter no longer apply, or court decisions may significantly change the tax
rules applicable to the Fund and its shareholders. Any of these changes or court decisions may have a retroactive
effect.
This is for general information only and not tax advice. All investors should consult
their own tax advisors as to the federal, state, local and foreign tax provisions applicable to
them.
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Taxation of the Fund. The Fund has elected and intends to qualify (or, if newly organized, intends to elect and qualify) each year as a “regulated investment company” (sometimes referred to as a regulated investment company, RIC or fund) under Subchapter M of the Code. If the Fund qualifies,
the Fund will not be subject to federal income tax on the portion of its investment company taxable income
(i.e., generally, taxable interest, dividends, net short-term capital gains and other taxable ordinary income
net of expenses without regard to the deduction for dividends paid) and net capital gain (i.e., the excess
of net long-term capital gains over net short-term capital losses) that it distributes to shareholders.
Qualification as a regulated investment company. In order to qualify for treatment as a regulated investment company, the Fund must satisfy the following requirements:
●
Distribution Requirement – the Fund must distribute an amount equal to the sum of at least 90% of its investment company taxable income and 90% of its net tax-exempt income, if any,
for the tax year (certain distributions made by the Fund after the close of its tax year are considered
distributions attributable to the previous tax year for purposes of satisfying this
requirement).
●
Income Requirement – the Fund must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, and gains from the sale
or other disposition of stock, securities or foreign currencies, or other income (including,
but not limited to, gains from options, futures or forward contracts) derived from its business of investing
in such stock, securities or currencies and net income derived from qualified publicly traded partnerships
(QPTPs).
●
Asset Diversification Test – the Fund must satisfy the following asset diversification test at the close of each quarter of the Fund’s tax year: (1) at least 50% of the value of the Fund’s assets must consist of cash and cash items, U.S. government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has not invested
more than 5% of the value of the Fund’s total assets in securities of an issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer); and (2) no more
than 25% of the value of the Fund’s total assets may be invested in the securities of any one issuer (other than U.S. government securities or securities of other regulated investment companies) or of
two or more issuers which the Fund controls and which are engaged in the same or similar trades
or businesses, or, collectively, in the securities of QPTPs.
In some circumstances, the character and timing of income realized by the Fund for
purposes of the Income Requirement or the identification of the issuer for purposes of the Asset Diversification
Test is uncertain under current law with respect to a particular investment, and an adverse
determination or future guidance by the IRS with respect to such type of investment may adversely affect the Fund’s ability to satisfy these requirements. See “Tax Treatment of Portfolio Transactions” with respect to the application of these requirements to certain types of investments. In other circumstances, the Fund may
be required to sell portfolio holdings in order to meet the Income Requirement, Distribution Requirement,
or Asset Diversification Test, which may have a negative impact on the Fund’s income and performance. In lieu of potential disqualification, the Fund is permitted to pay a tax for certain failures to satisfy
the Asset Diversification Test or Income Requirement, which, in general, are limited to those due to reasonable cause
and not willful neglect.
The Fund may use “equalization accounting” (in lieu of making some cash distributions) in determining the portion of its income and gains that has been distributed. If the Fund uses equalization
accounting, it will allocate a portion of its undistributed investment company taxable income and net
capital gain to redemptions of Fund shares and will correspondingly reduce the amount of such income and gains
that it distributes in cash. However, the Fund intends to make cash distributions for each taxable year in
an aggregate amount that is sufficient to satisfy the Distribution Requirement without taking into account
its use of equalization accounting. If the IRS determines that the Fund’s allocation is improper and that the Fund has under-distributed its income and gain for any taxable year, the Fund may be liable for federal income
and/or excise tax.
If for any taxable year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) would be subject to tax at the corporate income
tax rate without any
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deduction for dividends paid to shareholders, and the dividends would be taxable to
the shareholders as ordinary income (or possibly as qualified dividend income) to the extent of the Fund’s current and accumulated earnings and profits. Failure to qualify as a regulated investment company
thus would have a negative impact on the Fund’s income and performance. Subject to savings provisions for certain inadvertent failures to satisfy the Income Requirement or Asset Diversification Test which, in
general, are limited to those due to reasonable cause and not willful neglect, it is possible that the Fund will
not qualify as a regulated investment company in any given tax year. Even if such savings provisions apply, the
Fund may be subject to a monetary sanction of $50,000 or more. Moreover, the Board reserves the right not
to maintain the qualification of the Fund as a regulated investment company if it determines such
a course of action to be beneficial to shareholders.
Portfolio turnover. For investors that hold their Fund shares in a taxable account, a high portfolio
turnover rate (except in a money market fund that maintains a stable net asset value) may result
in higher taxes. This is because a fund with a high turnover rate may accelerate the recognition of capital
gains and more of such gains are likely to be taxable as short-term rather than long-term capital gains in
contrast to a comparable fund with a low turnover rate. Any such higher taxes would reduce the Fund’s after-tax performance. See “Taxation of Fund Distributions — Capital gain dividends” below. For non-U.S. investors, any such acceleration of the recognition of capital gains that results in more short-term and
less long-term capital gains being recognized by the Fund may cause such investors to be subject to increased U.S.
withholding taxes. See “Foreign Shareholders — U.S. withholding tax at the source” below.
Capital loss carryovers. The capital losses of the Fund, if any, do not flow through to shareholders. Rather, the Fund may use its capital losses, subject to applicable limitations, to
offset its capital gains without being required to pay taxes on or distribute to shareholders such gains that are offset
by the losses. If the Fund has a “net capital loss” (that is, capital losses in excess of capital gains), the excess (if any) of the Fund’s net short-term capital losses over its net long-term capital gains is treated as a short-term capital loss arising on the first day of the Fund’s next taxable year, and the excess (if any) of the Fund’s net long-term capital losses over its net short-term capital gains is treated as a long-term capital
loss arising on the first day of the Fund’s next taxable year. Any such net capital losses of the Fund that are not used to offset capital gains may be carried forward indefinitely to reduce any future capital gains realized
by the Fund in succeeding taxable years. The amount of capital losses that can be carried forward and used in
any single year is subject to an annual limitation if there is a more than 50% “change in ownership” of the Fund. An ownership change generally results when shareholders owning 5% or more of the Fund increase their aggregate
holdings by more than 50% over a three-year look-back period. An ownership change could result
in capital loss carryovers being used at a slower rate thereby reducing the Fund’s ability to offset capital gains with those losses. An increase in the amount of taxable gains distributed to the Fund’s shareholders could result from an ownership change. The Fund undertakes no obligation to avoid or prevent an ownership
change, which can occur in the normal course of shareholder purchases and redemptions or as a result
of engaging in a tax-free reorganization with another fund. Moreover, because of circumstances beyond the Fund’s control, there can be no assurance that the Fund will not experience, or has not already experienced,
an ownership change.
Deferral of late year losses. The Fund may elect to treat part or all of any “qualified late year loss” as if it had been incurred in the succeeding taxable year in determining the Fund’s taxable income, net capital gain, net short-term capital gain, and earnings and profits. The effect of this election is to treat any such “qualified late year loss” as if it had been incurred in the succeeding taxable year, which may change the timing, amount, or characterization of Fund distributions (see “Taxation of Fund Distributions — Capital gain dividends” below). A “qualified late year loss” includes:
(i) any net capital loss incurred after October 31 of the current taxable year, or,
if there is no such loss, any net long-term capital loss or any net short-term capital loss incurred after
October 31 of the current taxable year (post-October capital losses); and
(ii) the sum of (1) the excess, if any, of (a) specified losses incurred after October
31 of the current taxable year, over (b) specified gains incurred after October 31 of the current taxable
year and (2) the
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excess, if any, of (a) ordinary losses incurred after December 31 of the current taxable
year, over (b) the ordinary income incurred after December 31 of the current taxable year.
The terms “specified losses” and “specified gains” mean ordinary losses and gains from the sale, exchange, or other disposition of property (including the termination of a position
with respect to such property), foreign currency losses and gains, and losses and gains resulting from
holding stock in a passive foreign investment company (PFIC) for which a mark-to-market election is in effect. The terms “ordinary losses” and “ordinary income” mean other ordinary losses and income that are not described in the preceding sentence.
Special rules apply to a fund with a fiscal year ending in November or December that
elects to use its taxable year for determining its capital gain net income for excise tax purposes.
Undistributed capital gains. The Fund may retain or distribute to shareholders its net capital gain for each taxable year. The Fund currently intends to distribute net capital gains. If the Fund
elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available
capital loss carryovers) at the corporate income tax rate. If the Fund elects to retain its net capital gain,
it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its
pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of
such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share
of tax paid by the Fund on the gain and will increase the tax basis for its shares by an amount equal to the deemed
distribution less the tax credit.
Asset allocation funds. If the Fund is a fund of funds, asset allocation fund, or a feeder fund in a master-feeder structure (collectively referred to as a “fund of funds” which invests in one or more underlying funds taxable as regulated investment companies) distributions by the underlying funds,
redemptions of shares in the underlying funds and changes in asset allocations may result in taxable distributions
to shareholders of ordinary income or capital gains. A fund of funds (other than a feeder fund in a master-feeder
structure) generally will not be able currently to offset gains realized by one underlying fund
in which the fund of funds invests against losses realized by another underlying fund. If shares of an underlying
fund are purchased within 30 days before or after redeeming at a loss other shares of that underlying
fund (whether pursuant to a rebalancing of the Fund’s portfolio or otherwise), all or a part of the loss will not be deductible by the Fund and instead will increase its basis for the newly purchased shares. Also, except with
respect to a qualified fund of funds, a fund of funds (a) is not eligible to pass-through to shareholders foreign
tax credits from an underlying fund that pays foreign income taxes and (b) is not eligible to pass-through to shareholders
exempt-interest dividends from an underlying fund. A qualified fund of funds, i.e., a fund at least
50 percent of the value of the total assets of which (at the close of each quarter of the taxable year) is represented
by interests in other RICs, is eligible to pass-through to shareholders (a) foreign tax credits and (b)
exempt-interest dividends. Also a fund of funds, whether or not it is a qualified fund of funds, is eligible to pass-through
to shareholders qualified dividends earned by an underlying fund(see "Taxation of Fund Distributions ― Qualified dividend income for individuals" and "― Corporate dividends-received deduction" below). However, dividends paid to shareholders by a fund of funds from interest earned by an underlying fund on U.S.
government obligations are unlikely to be exempt from state and local income tax.
Federal excise tax. To avoid a 4% non-deductible excise tax, the Fund must distribute by December 31
of each year an amount equal to at least: (1) 98% of its ordinary income for the calendar
year, (2) 98.2% of capital gain net income (the excess of the gains from sales or exchanges of capital
assets over the losses from such sales or exchanges) for the one-year period ended on October 31 of such
calendar year (or, at the election of a regulated investment company having a taxable year ending November 30
or December 31, for its taxable year), and (3) any prior year undistributed ordinary income and capital
gain net income. The Fund may elect to defer to the following year any net ordinary loss incurred for the portion
of the calendar year which is after the beginning of the Fund’s taxable year. Also, the Fund will defer any “specified gain” or “specified loss” which would be properly taken into account for the portion of the calendar after October 31. Any net ordinary loss, specified gain, or specified loss deferred shall be treated
as arising on January 1 of the following calendar year. Generally, the Fund may make sufficient distributions to
avoid liability for federal
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income and excise tax, but can give no assurances that all or a portion of such liability
will be avoided. In addition, under certain circumstances temporary timing or permanent differences in
the realization of income and expense for book and tax purposes can result in the Fund having to pay an excise
tax.
Foreign income tax. Investment income received by the Fund from sources within foreign countries may
be subject to foreign income tax withheld at the source, and the amount of tax withheld
generally will be treated as an expense of the Fund. The United States has entered into tax treaties
with many foreign countries that entitle the Fund to a reduced rate of, or exemption from, tax on such
income. Some countries require the filing of a tax reclaim or other forms to receive the benefit of the reduced
tax rate; whether or when the Fund will receive the tax reclaim is within the control of the individual country.
Information required on these forms may not be available such as shareholder information; therefore, the Fund
may not receive the reduced treaty rates or potential reclaims. Other countries have conflicting and changing
instructions and restrictive timing requirements which may cause the Fund not to receive the reduced
treaty rates or potential reclaims. Other countries may subject capital gains realized by the Fund on sale or
disposition of securities of that country to taxation. These and other factors may make it difficult for the Fund
to determine in advance the effective rate of tax on its investments in certain countries. Under certain circumstances,
the Fund may elect to pass-through certain eligible foreign income taxes paid by the Fund to shareholders,
although it reserves the right not to do so. If the Fund makes such an election and obtains a refund of
foreign taxes paid by the Fund in a prior year, the Fund may be eligible to reduce the amount of foreign taxes
reported by the Fund to its shareholders, generally by the amount of the foreign taxes refunded, for the year
in which the refund is received. Certain foreign taxes imposed on the Fund's investments, such as a foreign
financial transaction tax, may not be creditable against U.S. income tax liability or eligible for pass
through by the Fund to its shareholders.
As a result of several court cases, in certain countries across the European Union,
the Fund may have filed additional tax reclaims for previously withheld taxes on dividends earned in
those countries ("EU reclaims"). For U.S. income tax purposes, EU reclaims plus interest received by the
Fund, if any, reduce the amount of foreign taxes Fund shareholders can use as tax deductions or credits on
their income tax returns, if any. Any interest received that offsets such foreign taxes is required to be reported
to the shareholder as additional dividend income from the Fund and included in the shareholder's gross income.
In the event that EU reclaims received by the Fund during a fiscal year exceed foreign withholding taxes
paid by the Fund, and the Fund previously passed through to its shareholders foreign taxes incurred by the
Fund to be used as a credit or deduction on a shareholder's income tax return, the Fund will enter into
a closing agreement with the IRS in order to pay the associated tax liability on behalf of the Fund's shareholders.
Investments in Foreign Currencies. Gains from the sale or other disposition of foreign currencies and other income (including but not limited to gains from options, futures or forward
contracts) derived from investing in stock, securities, or foreign currencies generally are included as qualifying
income in applying the Income Requirement. It should be noted, however, that for purposes of the Income Requirement,
the Secretary of the Treasury is authorized to issue regulations that would exclude from
qualifying income foreign currency gains which are not directly related to the principal business of the RIC
of investing in stock or securities (or options and futures with respect to stock or securities). No regulations
have been issued pursuant to this authorization. It is possible, however, that such regulations may
be issued in the future. If such future regulations were applied to the Fund, it is possible that the amount of
their qualifying income would no longer satisfy the Income Requirement and the Fund would fail to qualify
as a RIC. There is a possibility such regulations would be applied retroactively, in which case the Fund
might not qualify as a RIC for one or more years. In the event the Treasury Department issues such regulations,
the Board may authorize a significant change in investment strategy or other action. It is also
possible that the Fund's strategy of investing in foreign currencies or foreign currency instruments, such
as options, futures or forward contracts, might cause the Funds to fail to satisfy the Asset Diversification Test,
resulting in their failure to qualify as RICs. The IRS has not issued any guidance on how to apply the asset diversification
test to foreign currencies or instrument on foreign currencies. The tax treatment of the Fund and
its shareholders in the event the Fund fails to qualify as a RIC is described above under “Taxation of the Fund ― Qualification as a regulated investment company.”
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Taxation of Fund Distributions. The Fund anticipates distributing substantially all of its investment company taxable income and net capital gain for each taxable year. Distributions by
the Fund will be treated in the manner described below regardless of whether such distributions are paid in
cash or reinvested in additional shares of the Fund (or of another Fund). The Fund will send you information
annually as to the federal income tax consequences of distributions made (or deemed made) during the
year.
Distributions of ordinary income. The Fund receives income generally in the form of dividends and/or interest on its investments. The Fund may also recognize ordinary income from other
sources, including, but not limited to, certain gains on foreign currency-related transactions. This income,
less expenses incurred in the operation of the Fund, constitutes the Fund’s net investment income from which dividends may be paid to you. If you are a taxable investor, distributions of net investment income generally
are taxable as ordinary income to the extent of the Fund’s earnings and profits. In the case of a Fund whose strategy includes investing in stocks of corporations, a portion of the income dividends paid to you
may be qualified dividends eligible to be taxed at reduced rates.
Capital gain dividends. Taxes on distributions of capital gains are determined by how long the Fund owned the investments that generated them, rather than how long a shareholder has
owned his or her shares. In general, the Fund will recognize long-term capital gain or loss on the
sale or other disposition of assets it has owned for more than one year, and short-term capital gain or loss on
investments it has owned for one year or less. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) that are properly reported by the Fund to shareholders as capital gain
dividends generally will be taxable to a shareholder receiving such distributions as long-term capital
gain. Long-term capital gain rates applicable to individuals are 0%, 15% or 20% depending on the nature of the
capital gain and the individual’s taxable income. Distributions of net short-term capital gains for a taxable year in excess of net long-term capital losses for such taxable year generally will be taxable to a shareholder
receiving such distributions as ordinary income. Invesco Government Money Market Fund and Invesco
U.S. Government Money Portfolio do not expect to realize any long-term capital gains and losses.
Qualified dividend income for individuals. Ordinary income dividends reported by the Fund to shareholders as derived from qualified dividend income will be taxed in the hands
of individuals and other noncorporate shareholders at the rates applicable to long-term capital gain. Qualified
dividend income means dividends paid to the Fund (a) by domestic corporations, (b) by foreign corporations
that are either (i) incorporated in a possession of the United States, or (ii) are eligible for benefits
under certain income tax treaties with the United States that include an exchange of information program, or
(c) with respect to stock of a foreign corporation that is readily tradable on an established securities market
in the United States. Both the Fund and the investor must meet certain holding period requirements to qualify Fund
dividends for this treatment. Income derived from investments in derivatives, fixed-income securities,
PFICs, and income received “in lieu of” dividends in a securities lending transaction generally is not eligible for treatment as qualified dividend income. If the qualifying dividend income received by the Fund
is equal to 95% (or a greater percentage) of the Fund’s gross income (exclusive of net capital gain) in any taxable year, all of the ordinary income dividends paid by the Fund will be qualifying dividend income.
Qualified REIT dividends. Under the Tax Cuts and Jobs Act “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and portions of REIT dividends designated
as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers. This
deduction, if allowed in full, equates to a maximum effective tax rate of 29.6% (37% top rate applied to income
after 20% deduction). A Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund and a shareholder meet certain holding period requirements with respect
to their shares. A noncorporate shareholder receiving such dividends would treat them as eligible for
the 20% deduction, provided the RIC shares were held by the shareholder for more than 45 days during
the 91-day period beginning on the date that is 45 days before the date on which the shares become ex-dividend
with respect to such dividend. The amount of a RIC’s dividends eligible for the 20% deduction for a taxable year is limited to the excess of the RIC’s qualified REIT dividends for the taxable year over allocable expenses.
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Corporate dividends-received deduction. Ordinary income dividends reported by the Fund to shareholders as derived from qualified dividends from domestic corporations will qualify for the
50% dividends-received deduction generally available to corporations. The availability of the dividends-received
deduction is subject to certain holding period and debt financing restrictions imposed under the Code on the
corporation claiming the deduction. Income derived by the Fund from investments in derivatives, fixed-income
and foreign securities generally is not eligible for this treatment.
Maintaining a $1.00 share price. Invesco Government Money Market Fund and Invesco
U.S. Government Money Portfolio Gains and losses on the sale of portfolio securities and unrealized appreciation
or depreciation in the value of these securities may require the Fund to adjust its dividends
to maintain its $1 share price. This procedure may result in under- or over-distributions by the Fund
of its net investment income. This in turn may result in return of capital distributions, the effect of
which is described in the following paragraph.
Return of capital distributions. Distributions by the Fund that are not paid from earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder’s tax basis in his shares; any excess will be treated as gain from the sale of his shares. Thus, the portion
of a distribution that constitutes a return of capital will decrease the shareholder’s tax basis in his Fund shares (but not below zero), and will result in an increase in the amount of gain (or decrease in the amount
of loss) that will be recognized by the shareholder for tax purposes on the later sale of such Fund shares.
Return of capital distributions can occur for a number of reasons including, among others, the Fund
over-estimates the income to be received from certain investments such as those classified as partnerships or equity REITs. See “Tax Treatment of Portfolio Transactions – Investments in U.S. REITs”.
Impact of realized but undistributed income and gains, and net unrealized appreciation
of portfolio securities. At the time of your purchase of shares (except in a money market fund that maintains
a stable net asset value), the Fund’s net asset value may reflect undistributed income, undistributed capital gains, or net unrealized appreciation of portfolio securities held by the Fund. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable and would
be taxed as either ordinary income (some portion of which may be taxed as qualified dividend income)
or capital gain unless you are investing through a tax-advantaged arrangement, such as a 401(k) plan or an individual
retirement account. The Fund may be able to reduce the amount of such distributions by utilizing
its capital loss carryovers, if any.
Pass-through of foreign tax credits. If more than 50% of the value of the Fund’s total assets at the end of a fiscal year is invested in foreign securities, or if the Fund is a qualified fund
of funds (i.e., a fund at least 50 percent of the value of the total assets of which, at the close of each quarter of
the taxable year, is represented by interests in other RICs), the Fund may elect to “pass-through” to the Fund’s shareholders the amount of foreign income tax paid by the Fund (the Foreign Tax Election) in lieu of
deducting such amount in determining its investment company taxable income. Pursuant to the Foreign Tax Election,
shareholders will be required (i) to include in gross income, even though not actually received, their
respective pro-rata shares of the foreign income tax paid by the Fund that are attributable to any distributions
they receive; and (ii) either to deduct their pro-rata share of foreign tax in computing their taxable income or
to use it (subject to various Code limitations) as a foreign tax credit against federal income tax (but not both).
No deduction for foreign tax may be claimed by a noncorporate shareholder who does not itemize deductions or who
is subject to the alternative minimum tax. Shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income tax paid by the Fund due to certain limitations
that may apply. The Fund reserves the right not to pass-through to its shareholders the amount of foreign
income taxes paid by the Fund. Additionally, any foreign tax withheld on payments made “in lieu of” dividends or interest will not qualify for the pass-through of foreign tax credits to shareholders. See “Tax Treatment of Portfolio Transactions — Securities lending” below.
Consent dividends. The Fund may utilize consent dividend provisions of Section 565 of the Code to make
distributions. Provided that all shareholders agree in a consent filed with the income
tax return of the Fund to
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treat as a dividend the amount specified in the consent, the amount will be considered
a distribution just as any other distribution paid in money and reinvested back into the Fund.
Tax credit bonds. If the Fund holds, directly or indirectly, one or more “tax credit bonds” (including build America bonds, clean renewable energy bonds and qualified tax credit bonds) on one
or more applicable dates during a taxable year, the Fund may elect to permit its shareholders to claim
a tax credit on their income tax returns equal to each shareholder’s proportionate share of tax credits from the applicable bonds that otherwise would be allowed to the Fund. In such a case, shareholders must include
in gross income (as interest) their proportionate share of the income attributable to their proportionate
share of those offsetting tax credits. A shareholder’s ability to claim a tax credit associated with one or more tax credit bonds may be subject to certain limitations imposed by the Code. (Under the Tax Cuts and Jobs Act,
build America bonds, clean renewable energy bonds and certain other qualified bonds may no longer be issued
after December 31, 2017.) Even if the Fund is eligible to pass-through tax credits to shareholders, the
Fund may choose not to do so.
U.S. government interest. Income earned on certain U.S. government obligations is exempt from state and local personal income taxes if earned directly by you. States also grant tax-free
status to dividends paid to you from interest earned on direct obligations of the U.S. government, subject
in some states to minimum investment or reporting requirements that must be met by the Fund. Income on investments
by the Fund in certain other obligations, such as repurchase agreements collateralized by U.S. government
obligations, commercial paper and federal agency-backed obligations (e.g., GNMA or FNMA obligations),
generally does not qualify for tax-free treatment. The rules on exclusion of this income are different
for corporations. If the Fund is a fund of funds, see “Taxation of the Fund — Asset allocation funds.”
Dividends declared in December and paid in January. Ordinarily, shareholders are required to take distributions by the Fund into account in the year in which the distributions are
made. However, dividends declared in October, November or December of any year and payable to shareholders
of record on a specified date in such a month will be deemed to have been received by the shareholders
(and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in
January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences
of distributions made (or deemed made) during the year in accordance with the guidance that has been
provided by the IRS.
Medicare tax. A 3.8% Medicare tax is imposed on net investment income earned by certain individuals,
estates and trusts. “Net investment income,” for these purposes, means investment income, including ordinary dividends and capital gain distributions received from the Fund and net gains
from redemptions or other taxable dispositions of Fund shares, reduced by the deductions properly allocable
to such income. In the case of an individual, the tax will be imposed on the lesser of (1) the shareholder’s net investment income or (2) the amount by which the shareholder’s modified adjusted gross income exceeds $250,000 (if the shareholder is married and filing jointly or a surviving spouse), $125,000 (if the
shareholder is married and filing separately) or $200,000 (in any other case). This Medicare tax, if applicable,
is reported by you on, and paid with, your federal income tax return. Net investment income does not include
exempt-interest dividends.
Sale or Redemption of Fund Shares. A shareholder will recognize gain or loss on the sale or redemption of shares of the Fund in an amount equal to the difference between the
proceeds of the sale or redemption and the shareholder’s adjusted tax basis in the shares. If you owned your shares as a capital asset, any gain or loss that you realize will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than one year. Capital losses in any
year are deductible only to the extent of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
Tax basis information. The Fund is required to report to you and the IRS annually on Form 1099 B the cost basis of shares purchased or acquired on or after January 1, 2012 where the cost
basis of the shares is known by the Fund (referred to as covered shares) and which are disposed of after
that date. However, cost basis reporting is not required for certain shareholders, including shareholders investing
in the Fund through a tax-advantaged retirement account, such as a 401(k) plan or an individual retirement
account, or shareholders investing in a money market fund that maintains a stable net asset value. When required
to report cost basis, the Fund will calculate it using the Fund’s default method of average cost, unless you instruct the Fund to use
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a different calculation method. In general, average cost is the total cost basis of
all your shares in an account divided by the total number of shares in the account. To determine whether short-term
or long-term capital gains taxes apply, the IRS presumes you redeem your oldest shares first.
The IRS permits the use of several methods to determine the cost basis of mutual fund
shares. The method used will determine which specific shares are deemed to be sold when there
are multiple purchases on different dates at differing share prices, and the entire position is not sold
at one time. The Fund does not recommend any particular method of determining cost basis, and the use of other methods
may result in more favorable tax consequences for some shareholders. It is important that you consult
with your tax advisor to determine which method is best for you and then notify the Fund if you intend to utilize
a method other than average cost for covered shares.
In addition to the Fund’s default method of average cost, other cost basis methods offered by Invesco, which you may elect to apply to covered shares, include:
●
First-In, First-Out — shares acquired first in the account are the first shares depleted.
●
Last-In, First-Out — shares acquired last in the account are the first shares depleted.
●
High Cost — shares acquired with the highest cost per share are the first shares depleted.
●
Low Cost — shares acquired with the lowest cost per share are the first shares depleted.
●
Loss/Gain Utilization — depletes shares with losses before gains, consistent with the objective of minimizing taxes. For shares that yield a loss, shares owned one year or less (short-term)
will be depleted ahead of shares owned more than one year (long-term). For gains, long-term
shares will be depleted ahead of short-term gains.
●
Specific Lot Identification — shareholder selects which lots to deplete at time of each disposition. Transaction amount must be in shares. If insufficient shares are identified at the
time of disposition, then a secondary default method of first-in, first-out will be applied.
You may elect any of the available methods detailed above for your covered shares.
If you do not notify the Fund of your elected cost basis method, the default method of average cost will
be applied to your covered shares upon redemption. The cost basis for covered shares will be calculated
separately from any “noncovered shares” (defined below) you may own. You may change or revoke the use of the average cost method and revert to another cost basis method if you notify the Fund by the date
of the first sale, exchange, or other disposition of your covered shares. In addition, you may change to another
cost basis method at any time by notifying the Fund, but only for shares acquired after the date of the change
(the change is prospective). The basis of the shares that were averaged before the change will remain
averaged after the date of the change.
The Fund may also provide Fund shareholders (but not the IRS) with information concerning
the average cost basis of their shares purchased prior to January 1, 2012 (noncovered shares)
in order to assist you with the calculation of gain or loss from a sale or redemption of noncovered shares. With
the exception of the specific lot identification method, Invesco first depletes noncovered shares in first-in,
first-out order before applying your elected method to your remaining covered shares. If you want to deplete
your shares in a different order then you must elect specific lot identification and choose the lots
you wish to deplete first. Shareholders that use the average cost method for noncovered shares must make the
election to use the average cost method for these shares on their federal income tax returns in accordance
with Treasury regulations. This election for noncovered shares cannot be made by notifying the Fund.
The Fund will compute and report the cost basis of your Fund shares sold or exchanged
by taking into account all of the applicable adjustments to cost basis and holding periods as required
by the Code and Treasury regulations for purposes of reporting these amounts to you and, in the case
of covered shares, to the IRS. However, the Fund is not required to, and in many cases the Fund does not
possess the information to, take all possible basis, holding period or other adjustments into account in reporting
cost basis information to you. Therefore, shareholders should carefully review the cost basis information
provided by the Fund,
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whether this information is provided pursuant to compliance with cost basis reporting
requirements for shares acquired on or after January 1, 2012, or is provided by the Fund as a service to shareholders
for shares acquired prior to that date, and make any additional basis, holding period or other
adjustments that are required by the Code and Treasury regulations when reporting these amounts on their
federal income tax returns. Shareholders remain solely responsible for complying with all federal income
tax laws when filing their federal income tax returns.
If you hold your Fund shares through a broker (or other nominee), please contact that
broker (nominee) with respect to the reporting of cost basis and available elections for your account.
For more information about the cost basis methods offered by Invesco, please refer to the Tax Center located
under the Account Access & Forms menu of our website at www.invesco.com/us.
Wash sale rule. All or a portion of any loss so recognized may be deferred under the wash sale rules
if the shareholder purchases other shares of the Fund within 30 days before or after the
sale or redemption. Any loss disallowed under these rules will be added to your tax basis in the new Shares.
Sales at a loss within six months of purchase. Any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares.
Deferral of basis ― any class that bears a front-end sales load. If a shareholder (a) incurs a sales load in acquiring shares of the Fund, (b) disposes of such shares less than 91 days after
they are acquired, and (c) subsequently acquires shares of the Fund or another Fund by January 31 of the calendar
year following the calendar year in which the disposition of the original shares occurred at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired in connection with the acquisition
of the shares disposed of, then the sales load on the shares disposed of (to the extent of the reduction
in the sales load on the shares subsequently acquired) shall not be taken into account in determining gain
or loss on the shares disposed of, but shall be treated as incurred on the acquisition of the shares subsequently
acquired. The wash sale rules may also limit the amount of loss that may be taken into account on
disposition after such adjustment.
Conversion of shares of the Fund into other shares of the same Fund. The conversion of shares of one class of the Fund into shares of another class of the same Fund is not taxable for
federal income tax purposes and no gain or loss will be reported on the transaction. This is true whether
the conversion occurs automatically pursuant to the terms of the class or is initiated by the shareholder.
Shareholders should consult their tax advisors regarding the state and local tax consequences of a conversion
of shares.
Exchange of shares of the Fund for shares of another Fund. The exchange of shares in one Fund for shares of another Fund is taxable for federal income tax purposes and the exchange
will be reported as a taxable sale. An exchange occurs when the purchase of shares of a Fund is made using
the proceeds from a redemption of shares of another Fund and is effectuated on the same day as the redemption.
Shareholders should consult their tax advisors regarding the state and local tax consequences of
an exchange of shares.
Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio. Because shares in Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio
are offered and redeemed at a constant net asset value of $1.00 per share, a shareholder
will generally recognize neither gain nor loss on a redemption of shares.
Reportable transactions. Under Treasury regulations, if a shareholder recognizes a loss with respect to the Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or certain greater amounts over a combination of years), the shareholder
must file with the IRS a disclosure statement on Form 8886. The fact that a loss is reportable under these
regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of
their individual circumstances.
Tax Treatment of Portfolio Transactions. Set forth below is a general description of the tax treatment of certain types of securities, investment techniques and transactions that may apply
to a fund. This section
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should be read in conjunction with the discussion under “Description of the Funds and their Investments and Risks — Investment Strategies and Risks” for a detailed description of the various types of securities and investment techniques that apply to the Fund.
In general. In general, gain or loss recognized by a fund on the sale or other disposition of
portfolio investments will be a capital gain or loss. Such capital gain and loss may be long-term
or short-term depending, in general, upon the length of time a particular investment position is
maintained and, in some cases, upon the nature of the transaction. Property held for more than one year generally
will be eligible for long-term capital gain or loss treatment. The application of certain rules described
below may serve to alter the manner in which the holding period for a security is determined or may otherwise
affect the characterization as long-term or short-term, and also the timing of the realization
and/or character, of certain gains or losses.
Certain fixed-income investments. Gain recognized on the disposition of a debt obligation purchased by a fund at a market discount (generally, at a price less than its principal amount) will
be treated as ordinary income to the extent of the portion of the market discount that accrued during the
period of time the fund held the debt obligation unless the fund made a current inclusion election to accrue market
discount into income as it accrues. If a fund purchases a debt obligation (such as a zero coupon security
or pay-in-kind security) that was originally issued at a discount, the fund generally is required to include in
gross income each year the portion of the original issue discount that accrues during such year. Therefore, a fund’s investment in such securities may cause the fund to recognize income and make distributions to shareholders
before it receives any cash payments on the securities. To generate cash to satisfy those distribution
requirements, a fund may have to sell portfolio securities that it otherwise might have continued to hold or
to use cash flows from other sources such as the sale of fund shares.
Investments in debt obligations that are at risk of or in default present tax issues
for a fund. Tax rules are not entirely clear about issues such as whether and to what extent a fund should recognize
market discount on a debt obligation, when a fund may cease to accrue interest, original issue discount
or market discount, when and to what extent a fund may take deductions for bad debts or worthless securities
and how a fund should allocate payments received on obligations in default between principal and
income. These and other related issues will be addressed by a fund in order to ensure that it distributes
sufficient income to preserve its status as a regulated investment company.
Options, futures, forward contracts, swap agreements and hedging transactions. In general, option premiums received by a fund are not immediately included in the income of the fund.
Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder,
or the fund transfers or otherwise terminates the option (e.g., through a closing transaction). If an option
written by a fund is exercised and the fund sells or delivers the underlying stock, the fund generally will recognize
capital gain or loss equal to (a) the sum of the strike price and the option premium received by the fund minus (b) the fund’s basis in the stock. Such gain or loss generally will be short-term or long-term depending upon
the holding period of the underlying stock. If securities are purchased by a fund pursuant to the exercise of
a put option written by it, the fund generally will subtract the premium received from its cost basis in the securities
purchased. The gain or loss with respect to any termination of a fund’s obligation under an option other than through the exercise of the option and related sale or delivery of the underlying stock generally will
be short-term gain or loss depending on whether the premium income received by the fund is greater or less than
the amount paid by the fund (if any) in terminating the transaction. Thus, for example, if an option
written by a fund expires unexercised, the fund generally will recognize short-term gain equal to the premium
received.
The tax treatment of certain futures contracts entered into by a fund as well as listed
non-equity options written or purchased by the fund on U.S. exchanges (including options on futures contracts,
broad-based equity indices and debt securities) may be governed by section 1256 of the Code (section
1256 contracts). Gains or losses on section 1256 contracts generally are considered 60% long-term and
40% short-term capital gains or losses (60/40), although certain foreign currency gains and losses
from such contracts may be treated as ordinary in character. Also, any section 1256 contracts held by a fund
at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are
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“marked-to-market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.
Section 1256 contracts do not include any interest rate swap, currency swap, basis swap, interest
rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar
agreement.
In addition to the special rules described above in respect of options and futures transactions, a fund’s transactions in other derivative instruments (including options, forward contracts
and swap agreements) as well as its other hedging, short sale, or similar transactions, may be subject to
one or more special tax rules (including the constructive sale, notional principal contract, straddle, wash sale
and short sale rules). These rules may affect whether gains and losses recognized by a fund are treated as ordinary
or capital or as short-term or long-term, accelerate the recognition of income or gains to the fund, defer losses
to the fund, and cause adjustments in the holding periods of the fund’s securities. These rules, therefore, could affect the amount, timing and/or character of distributions to shareholders. Moreover, because
the tax rules applicable to derivative financial instruments are in some cases uncertain under current law,
an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance
could be retroactive) may affect whether a fund has made sufficient distributions and otherwise satisfied
the relevant requirements to maintain its qualification as a regulated investment company and avoid a fund-level
tax.
Certain of a fund’s investments in derivatives and foreign currency-denominated instruments, and the fund’s transactions in foreign currencies and hedging activities, may produce a difference between its book income and its taxable income. If a fund’s book income is less than the sum of its taxable income and net tax-exempt income (if any), the fund could be required to make distributions exceeding book
income to qualify as a regulated investment company. If a fund’s book income exceeds the sum of its taxable income and net tax-exempt income (if any), the distribution of any such excess will be treated as (i) a dividend
to the extent of the fund’s remaining earnings and profits (including current earnings and profits arising from tax-exempt income, reduced by related deductions), (ii) thereafter, as a return of capital to the extent of the recipient’s basis in the shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset.
Treasury Inflation Protected Securities. Adjustments for inflation to the principal amount of an inflation-protected U.S. Treasury bond held by a fund may be included for tax purposes in the fund’s gross income, even though no cash attributable to such gross income has been received by the fund.
In such event, the fund may be required to make annual distributions to shareholders that exceed the cash
it has otherwise received. In order to pay such distributions, the fund may be required to raise cash by selling
portfolio investments. The sale of such investments could result in capital gains to the fund and additional
capital gain distributions to fund shareholders. In addition, adjustments during the taxable year for deflation
to an inflation-indexed bond held by a fund may cause amounts previously distributed in the taxable year as income
to be characterized as a return of capital.
Foreign currency transactions. A fund’s transactions in foreign currencies, foreign currency-denominated debt obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or
loss results from fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease a fund’s ordinary income distributions to you, and may cause some or all of the fund’s previously distributed income to be classified as a return of capital. In certain cases, a fund may make an election
to treat such gain or loss as capital.
PFIC investments. A fund may invest in securities of foreign companies that may be classified under
the Code as PFICs. In general, a foreign company is classified as a PFIC if at least one-half
of its assets constitute investment-type assets or 75% or more of its gross income is investment-type
income. When investing in PFIC securities, a fund intends to mark-to-market these securities under
certain provisions of the Code and recognize any unrealized gains as ordinary income at the end of the fund’s fiscal and excise tax years. Deductions for losses are allowable only to the extent of any current or previously
recognized gains. These gains (reduced by allowable losses) are treated as ordinary income that a fund
is required to distribute, even though it has not sold or received dividends from these securities. You should
also be aware that the designation of a foreign security as a PFIC security will cause its income dividends
to fall outside of the
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definition of qualified foreign corporation dividends. These dividends generally will
not qualify for the reduced rate of taxation on qualified dividends when distributed to you by a fund. Foreign
companies are not required to identify themselves as PFICs. Due to various complexities in identifying PFICs,
a fund can give no assurances that it will be able to identify portfolio securities in foreign corporations
that are PFICs in time for the fund to make a mark-to-market election. If a fund is unable to identify an investment
as a PFIC and thus does not make a mark-to-market election, the fund may be subject to U.S. federal income
tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the fund to its shareholders. Additional charges in the nature
of interest may be imposed on a fund in respect of deferred taxes arising from such distributions or gains.
Investments in non-U.S. REITs. While non-U.S. REITs often use complex acquisition structures that seek to minimize taxation in the source country, an investment by a fund in a non-U.S.
REIT may subject the fund, directly or indirectly, to corporate taxes, withholding taxes, transfer taxes and
other indirect taxes in the country in which the real estate acquired by the non-U.S. REIT is located. The fund's
pro rata share of any such taxes will reduce the fund's return on its investment. A fund's investment in
a non-U.S. REIT may be considered an investment in a PFIC, as discussed above in “Tax Treatment of Portfolio Transactions – PFIC investments.” Additionally, foreign withholding taxes on distributions from the non-U.S. REIT may be reduced or eliminated under certain tax treaties, as discussed above in “Taxation of the Fund – Foreign income tax.” Also, the fund in certain limited circumstances may be required to file an income
tax return in the source country and pay tax on any gain realized from its investment in the non-U.S. REIT
under rules similar to those in the United States which tax foreign persons on gain realized from dispositions
of interests in U.S. real estate.
Investments in U.S. REITs. A U.S. REIT is not subject to federal income tax on the income and gains it distributes to shareholders. Dividends paid by a U.S. REIT, other than capital gain
distributions, will be taxable as ordinary income up to the amount of the U.S. REIT’s current and accumulated earnings and profits. Capital gain dividends paid by a U.S. REIT to a fund will be treated as long-term capital
gains by the fund and, in turn, may be distributed by the fund to its shareholders as a capital gain distribution.
Because of certain noncash expenses, such as property depreciation, an equity U.S. REIT’s cash flow may exceed its taxable income. The equity U.S. REIT, and in turn a fund, may distribute this excess cash to shareholders
in the form of a return of capital distribution. However, if a U.S. REIT is operated in a manner that
fails to qualify as a REIT, an investment in the U.S. REIT would become subject to double taxation, meaning the taxable
income of the U.S. REIT would be subject to federal income tax at the corporate income tax rate
without any deduction for dividends paid to shareholders and the dividends would be taxable to shareholders
as ordinary income (or possibly as qualified dividend income) to the extent of the U.S. REIT’s current and accumulated earnings and profits. Also, see “Tax Treatment of Portfolio Transactions — Investment in taxable mortgage pools (excess inclusion income)” and “Foreign Shareholders — U.S. withholding tax at the source” with respect to certain other tax aspects of investing in U.S. REITs.
Investment in taxable mortgage pools (excess inclusion income). Under a Notice issued by the IRS, the Code and Treasury regulations to be issued, a portion of a fund’s income from a U.S. REIT that is attributable to the REIT’s residual interest in a real estate mortgage investment conduit (REMIC) or equity interests in a “taxable mortgage pool” (referred to in the Code as an excess inclusion) will be subject to federal income tax in all events. The excess inclusion income of a regulated investment company, such
as a fund, will be allocated to shareholders of the regulated investment company in proportion to the
dividends received by such shareholders, with the same consequences as if the shareholders held the related
REMIC residual interest or, if applicable, taxable mortgage pool directly. In general, excess inclusion
income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception
for certain thrift institutions), (ii) will constitute unrelated business taxable income (UBTI) to entities
(including qualified pension plans, individual retirement accounts, 401(k) plans, Keogh plans or other
tax-exempt entities) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess
inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay
tax on such income, and (iii) in the case of a foreign stockholder, will not qualify for any reduction in U.S. federal
withholding tax. In addition, if at any time during any taxable year a “disqualified organization” (which generally includes certain
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cooperatives, governmental entities, and tax-exempt organizations not subject to tax
on UBTI) is a record holder of a share in a regulated investment company, then the regulated investment
company will be subject to a tax equal to that portion of its excess inclusion income for the taxable year
that is allocable to the disqualified organization, multiplied by the corporate income tax rate. The Notice
imposes certain reporting requirements upon regulated investment companies that have excess inclusion income.
Code Section 860E(f) further provides that, except as provided in regulations (which have not been
issued), with respect to any variable contract (as defined in section 817), there shall be no adjustment in
the reserve to the extent of any excess inclusion. There can be no assurance that a fund will not allocate to
shareholders excess inclusion income.
These rules are potentially applicable to a fund with respect to any income it receives
from the equity interests of certain mortgage pooling vehicles, either directly or, as is more likely,
through an investment in a U.S. REIT. It is unlikely that these rules will apply to a fund that has a non-REIT
strategy.
Investments in partnerships and QPTPs. For purposes of the Income Requirement, income derived by a fund from a partnership that is not a QPTP will be treated as qualifying income only
to the extent such income is attributable to items of income of the partnership that would be qualifying income
if realized directly by the fund. While the rules are not entirely clear with respect to a fund investing in a
partnership outside a master-feeder structure, for purposes of testing whether a fund satisfies the Asset Diversification
Test, the fund generally is treated as owning a pro rata share of the underlying assets of a partnership. See “Taxation of the Fund — Qualification as a regulated investment company.” In contrast, different rules apply to a partnership that is a QPTP. A QPTP is a partnership (a) the interests in which are traded on an
established securities market, (b) that is treated as a partnership for federal income tax purposes, and
(c) that derives less than 90% of its income from sources that satisfy the Income Requirement (e.g., because it invests
in commodities). All of the net income derived by a fund from an interest in a QPTP will be treated as
qualifying income but the fund may not invest more than 25% of its total assets in one or more QPTPs. However,
there can be no assurance that a partnership classified as a QPTP in one year will qualify as a QPTP
in the next year. Any such failure to annually qualify as a QPTP might, in turn, cause a fund to fail to
qualify as a regulated investment company. Although, in general, the passive loss rules of the Code do not
apply to RICs, such rules do apply to a fund with respect to items attributable to an interest in a QPTP. Fund
investments in partnerships, including in QPTPs, may result in the fund being subject to state, local
or foreign income, franchise or withholding tax liabilities.
If an MLP is treated as a partnership for U.S. federal income tax purposes (whether
or not a QPTP), all or portion of the dividends received by a fund from the MLP likely will be treated as
a return of capital for U.S. federal income tax purposes because of accelerated deductions available with respect
to the activities of such MLPs. Further, because of these accelerated deductions, on the disposition of interests
in such an MLP, a fund likely will realize taxable income in excess of economic gain with respect to
those MLP interests (or if the fund does not dispose of the MLP, the fund could realize taxable income in excess
of cash flow with respect to the MLP in a later period), and the fund must take such income into account in determining
whether the fund has satisfied its Distribution Requirement. A fund may have to borrow or liquidate
securities to satisfy its Distribution Requirement and to meet its redemption requests, even though investment
considerations might otherwise make it undesirable for the fund to sell securities or borrow money at such
time. In addition, any gain recognized, either upon the sale of a fund’s MLP interest or sale by the MLP of property held by it, including in excess of economic gain thereon, treated as so-called “recapture income,” will be treated as ordinary income. Therefore, to the extent a fund invests in MLPs, fund shareholders
might receive greater amounts of distributions from the fund taxable as ordinary income than they otherwise
would in the absence of such MLP investments.
Although MLPs are generally expected to be treated as partnerships for U.S. federal
income tax purposes, some MLPs may be treated as PFICs or “regular” corporations for U.S. federal income tax purposes. The treatment of particular MLPs for U.S. federal income tax purposes will
affect the extent to which a fund can invest in MLPs and will impact the amount, character, and timing
of income recognized by the Fund.
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Investments in commodities, structured notes, corporate subsidiary and certain ETFs. Gains from the disposition of commodities, including precious metals, will neither be considered
qualifying income for purposes of satisfying the Income Requirement nor qualifying assets for purposes of
satisfying the Asset Diversification Test. See “Taxation of the Fund — Qualification as a regulated investment company.” Also, the IRS has issued a revenue ruling which holds that income derived from commodity-linked
swaps is not qualifying income for purposes of the Income Requirement. In a subsequent revenue
ruling, as well as in a number of follow-on private letter rulings (upon which only the fund that received
the private letter ruling may rely), the IRS provides that income from certain alternative investments which create
commodity exposure, such as certain commodity-linked or structured notes or a corporate subsidiary that
invests in commodities, may be considered qualifying income under the Code.
However, the portion of such rulings relating to the treatment of a corporation as
a regulated investment company that require a determination of whether a financial instrument or position
is a security under section 2(a)(36) of the 1940 Act was revoked because of changes in the IRS’s position. (A financial instrument or position that constitutes a security under section 2(a)(36) of the 1940 Act generates
qualifying income for a corporation taxed as a regulated investment company.) Accordingly, a fund may invest
in certain commodity-linked notes relying on an opinion of counsel confirming that income from such investments
should be qualifying income because such commodity-linked notes constitute securities under
section 2(a)(36) of the 1940 Act. In addition, a RIC may gain exposure to commodities through investment in
a QPTP, such as an exchange-traded fund or ETF that is classified as a partnership and which invests
in commodities, or through investment in a wholly-owned foreign subsidiary that is treated as a controlled foreign
corporation for federal income tax purposes. Treasury regulations treat “Subpart F” income (defined in Section 951 of the Code to include passive income such as income from commodity-linked derivatives) as qualifying
income, even if a foreign corporation, such as a wholly-owned foreign subsidiary, does not make a distribution
of such income. If a distribution is made, such income will be treated as a dividend by the Funds
to the extent that, under applicable provisions of the Code, there is a distribution out of the earnings and
profits of the foreign corporation attributable to the distribution. Accordingly, the extent to which a fund
directly invests in commodities or commodity-linked derivatives may be limited by the Income Requirement
and the Asset Diversification Test, which the fund must continue to satisfy to maintain its status
as a regulated investment company. A fund also may be limited in its ability to sell its investments in commodities,
commodity-linked derivatives, and certain ETFs or be forced to sell other investments to generate income
due to the Income Requirement. If a fund does not appropriately limit such investments or if such investments
(or the income earned on such investments) were to be recharacterized for U.S. tax purposes, the
fund could fail to qualify as a regulated investment company. In lieu of potential disqualification, a fund is
permitted to pay a tax for certain failures to satisfy the Asset Diversification Test or Income Requirement,
which, in general, are limited to those due to reasonable cause and not willful neglect.
Securities lending. While securities are loaned out by a fund, the fund generally will receive from the
borrower amounts equal to any dividends or interest paid on the borrowed securities.
For federal income tax purposes, payments made “in lieu of” dividends are not considered dividend income. These distributions will neither qualify for the reduced rate of taxation for individuals on qualified dividends
nor the 50% dividends-received deduction for corporations. Also, any foreign tax withheld on payments made “in lieu of” dividends or interest will not qualify for the pass-through of foreign tax credits to shareholders.
Additionally, in the case of a fund with a strategy of investing in tax-exempt securities, any payments made “in lieu of” tax-exempt interest will be considered taxable income to the fund, and thus, to the investors, even though
such interest may be tax-exempt when paid to the borrower.
Investments in convertible securities. Convertible debt is ordinarily treated as a “single property” consisting of a pure debt interest until conversion, after which the investment becomes
an equity interest. If the security is issued at a premium (i.e., for cash in excess of the face amount payable
on retirement), the creditor-holder may amortize the premium over the life of the bond. If the security
is issued for cash at a price below its face amount, the creditor-holder must accrue original issue discount in
income over the life of the debt. The creditor-holder’s exercise of the conversion privilege is treated as a nontaxable event. Mandatorily convertible debt (e.g., an exchange-traded note or ETN issued in the form of an unsecured
obligation that
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pays a return based on the performance of a specified market index, exchange currency,
or commodity) is often, but not always, treated as a contract to buy or sell the reference property
rather than debt. Similarly, convertible preferred stock with a mandatory conversion feature is ordinarily, but
not always, treated as equity rather than debt. Dividends received may be qualified dividend income and eligible
for the corporate dividends-received deduction. In general, conversion of preferred stock for common
stock of the same corporation is tax-free. Conversion of preferred stock for cash is a taxable redemption.
Any redemption premium for preferred stock that is redeemable by the issuing company might be required
to be amortized under original issue discount principles. A change in the conversion ratio or conversion
price of a convertible security on account of a dividend paid to the issuer’s other shareholders may result in a deemed distribution of stock to the holders of the convertible security equal to the value of their increased
interest in the equity of the issuer. Thus, an increase in the conversion ratio of a convertible security can
be treated as a taxable distribution of stock to a holder of the convertible security (without a corresponding
receipt of cash by the holder) before the holder has converted the security.
Tax Certification and Backup Withholding. Tax certification and backup withholding tax laws may require that you certify your tax information when you become an investor in the Fund.
For U.S. citizens and resident aliens, this certification is made on IRS Form W-9. Under these laws, the
Fund must withhold a portion of your taxable distributions and sales proceeds unless you:
●
provide your correct Social Security or taxpayer identification number;
●
certify that this number is correct;
●
certify that you are not subject to backup withholding; and
●
certify that you are a U.S. person (including a U.S. resident alien).
The Fund also must withhold if the IRS instructs it to do so. When withholding is
required, the amount will be 24% of any distributions or proceeds paid. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability, provided the appropriate information is furnished to the IRS. Certain payees and payments are exempt from backup
withholding and information reporting.
Non-U.S. investors have special U.S. tax certification requirements. See “Foreign Shareholders — Tax certification and backup withholding.”
Foreign Shareholders. Shareholders who, as to the United States, are nonresident alien individuals, foreign trusts or estates, foreign corporations, or foreign partnerships (foreign
shareholder), may be subject to U.S. withholding and estate tax and are subject to special U.S. tax certification
requirements.
Taxation of a foreign shareholder depends on whether the income from the Fund is “effectively connected” with a U.S. trade or business carried on by such shareholder.
U.S. withholding tax at the source. If the income from the Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, distributions to such shareholder
will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of
the distribution, subject to certain exemptions including those for dividends reported by the Fund to shareholders
as:
●
exempt-interest dividends paid by the Fund from its net interest income earned on
municipal securities;
●
capital gain dividends paid by the Fund from its net long-term capital gains (other
than those from disposition of a U.S. real property interest), unless you are a nonresident alien
present in the United States for a period or periods aggregating 183 days or more during the calendar year;
and
●
interest-related dividends paid by the Fund from its qualified net interest income
from U.S. sources and short-term capital gain dividends.
However, the Fund does not intend to utilize the exemptions for interest-related dividends
paid and short-term capital gain dividends paid. Moreover, notwithstanding such exemptions from U.S.
withholding at the
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source, any dividends and distributions of income and capital gains, including the
proceeds from the sale of your Fund shares, will be subject to backup withholding at a rate of 24% if you fail
to properly certify that you are not a U.S. person.
Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the
income resulting from an election to pass-through foreign tax credits to shareholders, but may not
be able to claim a credit or deduction with respect to the withholding tax for the foreign tax treated as having
been paid by them.
Amounts reported by the Fund to shareholders as capital gain dividends (a) that are
attributable to certain capital gain dividends received from a qualified investment entity (QIE) (generally
defined as either (i) a U.S. REIT or (ii) a RIC classified as a “U.S. real property holding corporation” or which would be if the exceptions for holding 5% or less of a class of publicly traded shares or an interest in a domestically
controlled QIE did not apply), or (b) that are realized by the Fund on the sale of a “U.S. real property interest” (including gain realized on the sale of shares in a QIE other than one that is domestically controlled),
will not be exempt from U.S. federal income tax and may be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) if the Fund by reason of having a REIT strategy is classified as a QIE. If the Fund is
so classified, foreign shareholders owning more than 5% of the Fund’s shares may be treated as realizing gain from the disposition of a U.S. real property interest, causing Fund distributions to be subject to U.S.
withholding tax at the corporate income tax rate, and requiring the filing of a nonresident U.S. income tax
return. In addition, if the Fund is classified as a QIE, anti-avoidance rules apply to certain wash sale transactions.
Namely, if the Fund is a domestically controlled QIE and a foreign shareholder disposes of the Fund’s shares prior to the Fund paying a distribution attributable to the disposition of a U.S. real property interest
and the foreign shareholder later acquires an identical stock interest in a wash sale transaction, the foreign
shareholder may still be required to pay U.S. tax on the Fund’s distribution. Also, the sale of shares of the Fund, if classified as a “U.S. real property holding corporation,” could also be considered a sale of a U.S. real property interest with any resulting gain from such sale being subject to U.S. tax as income “effectively connected with a U.S. trade or business.”
Income effectively connected with a U.S. trade or business. If the income from the Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then
ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares
of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic
corporations and require the filing of a nonresident U.S. income tax return.
Tax certification and backup withholding. Foreign shareholders may have special U.S. tax certification requirements to avoid backup withholding (at a rate of 24%) and, if applicable, to
obtain the benefit of any income tax treaty between the foreign shareholder’s country of residence and the United States. To claim these tax benefits, the foreign shareholder must provide a properly completed Form
W-8BEN (or other Form W-8, where applicable, or their substitute forms) to establish his or her status as
a non-U.S. investor, to claim beneficial ownership over the assets in the account, and to claim, if applicable,
a reduced rate of or exemption from withholding tax under the applicable treaty. A Form W-8BEN provided without a
U.S. taxpayer identification number remains in effect for a period of three years beginning on the
date that it is signed and ending on the last day of the third succeeding calendar year. However, non-U.S. investors
must advise the Fund of any changes of circumstances that would render the information given on the
form incorrect, and must then provide a new W-8BEN to avoid the prospective application of backup withholding.
Forms W-8BEN with U.S. taxpayer identification numbers remain valid indefinitely, or until the
investor has a change of circumstances that renders the form incorrect and necessitates a new form and tax
certification. Certain payees and payments are exempt from backup withholding.
Foreign Account Tax Compliance Act (FATCA). Under FATCA, the Fund will be required to withhold a 30% tax on income dividends made by the Fund to certain foreign entities, referred to
as foreign financial institutions (FFI) or non-financial foreign entities (NFFE). After December 31, 2018,
FATCA withholding also would have applied to certain capital gain distributions, return of capital distributions
and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by the
IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide
otherwise (which is not
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expected). The FATCA withholding tax generally can be avoided: (a) by an FFI, if it
reports certain direct and indirect ownership of foreign financial accounts held by U.S. persons with the FFI
and (b) by an NFFE, if it: (i) certifies that it has no substantial U.S. persons as owners or (ii) if it does have
such owners, reporting information relating to them. The U.S. Treasury has negotiated intergovernmental agreements
(IGA) with certain countries and is in various stages of negotiations with a number of other
foreign countries with respect to one or more alternative approaches to implement FATCA.
An FFI can avoid FATCA withholding if it is deemed compliant or by becoming a “participating FFI,” which requires the FFI to enter into a U.S. tax compliance agreement with the IRS under
section 1471(b) of the Code (FFI agreement) under which it agrees to verify, report and disclose certain
of its U.S. accountholders and meet certain other specified requirements. The FFI will either report the specified
information about the U.S. accounts to the IRS, or, to the government of the FFI’s country of residence (pursuant to the terms and conditions of applicable law and an applicable IGA entered into between the U.S. and the FFI’s country of residence), which will, in turn, report the specified information to the IRS. An FFI
that is resident in a country that has entered into an IGA with the U.S. to implement FATCA will be exempt from
FATCA withholding provided that the FFI shareholder and the applicable foreign government comply with
the terms of such agreement.
An NFFE that is the beneficial owner of a payment from the Fund can avoid the FATCA
withholding tax generally by certifying that it does not have any substantial U.S. owners or by providing
the name, address and taxpayer identification number of each substantial U.S. owner. The NFFE will report
the information to the Fund or other applicable withholding agent, which will, in turn, report the information
to the IRS.
Such foreign shareholders also may fall into certain exempt, excepted or deemed compliant
categories as established by U.S. Treasury regulations, IGAs, and other guidance regarding FATCA.
An FFI or NFFE that invests in the Fund will need to provide the Fund with documentation properly certifying the entity’s status under FATCA in order to avoid FATCA withholding. Non-U.S. investors should consult
their own tax advisors regarding the impact of these requirements on their investment in the Fund. The requirements
imposed by FATCA are different from, and in addition to, the U.S. tax certification rules to
avoid backup withholding described above. Shareholders are urged to consult their tax advisors regarding the
application of these requirements to their own situation.
U.S. estate tax. Transfers by gift of shares of the Fund by a foreign shareholder who is a nonresident
alien individual will not be subject to U.S. federal gift tax. An individual who,
at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to
shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exemption applies.
If a treaty exemption is available, a decedent’s estate may nonetheless need to file a U.S. estate tax return to claim the exemption in order to obtain a U.S. federal transfer certificate. The transfer certificate will
identify the property (i.e., Fund shares) as to which the U.S. federal estate tax lien has been released. In the absence
of a treaty, there is a $13,000 statutory estate tax credit (equivalent to an estate with assets of $60,000).
Local Tax Considerations. Rules of state and local taxation of ordinary income, qualified dividend income and capital gain dividends may differ from the rules for U.S. federal income
taxation described above. Distributions may also be subject to additional state, local and foreign taxes depending on each shareholder’s particular situation.
DISTRIBUTION OF SECURITIES
Class AX, CX and RX shares are closed to new investors. Only investors who have continuously
maintained an account in Class A5, C5 or R5 of a specific Fund may make additional
purchases into Class AX, CX and RX, respectively, of such specific Fund. All references in the following
"Distribution of Securities" section of this SAI to Class A, C, and R shares shall include Class AX, Class CX,
and Class RX shares, respectively, unless otherwise noted.
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Distributor
The Trust has entered into a master distribution agreement, as amended, relating to
the Funds (the Distribution Agreement) with Invesco Distributors, Inc. (Invesco Distributors), a
registered broker-dealer and a wholly-owned subsidiary of Invesco Ltd., pursuant to which Invesco Distributors acts
as the distributor of shares of the Funds. The address of Invesco Distributors is 11 Greenway Plaza, Houston,
TX 77046-1173. Certain trustees and officers of the Trust are affiliated with Invesco Distributors. See “Management of the Trust.” In addition to the Funds, Invesco Distributors serves as distributor to many other mutual funds that are offered to retail investors. The following Distribution of Securities information
is about all of the Invesco Funds that offer retail and/or Class R5 or Class R6 shares. Not all Invesco Funds offer
all share classes.
The Distribution Agreement provides Invesco Distributors with the exclusive right
to distribute shares of the Funds on a continuous basis directly and through other broker-dealers and other
financial intermediaries with whom Invesco Distributors has entered into selected dealer and/or similar agreements.
Invesco Distributors has not undertaken to sell any specified number of shares of any classes
of the Funds.
Invesco Distributors expects to pay sales commissions from its own resources to dealers
and institutions who sell Class C and Class R shares of the Funds at the time of such sales.
Invesco Distributors may pay sales commissions to dealers and institutions who sell
Class C shares of the Invesco Funds at the time of such sales. Payments for Class C shares generally
equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, consisting
of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first
year service fee of up to 0.25% for such shares. Invesco Distributors will retain all payments received by it
relating to Class C shares for the first year after they are purchased. The portion of the payments to Invesco
Distributors under the Class C Plan that constitutes an asset-based sales charge (0.75%) is intended in part to
permit Invesco Distributors to recoup a portion of the sales commissions to dealers plus financing costs, if any.
After the first full year, Invesco Distributors will make payments to dealers and institutions based on the average
net asset value of Class C shares that are attributable to shareholders for whom the dealers and institutions
are designated as dealers of record. These payments will consist of an asset-based sales charge of 0.75%
and a service fee of up to 0.25%.
Invesco Distributors may pay dealers and institutions who sell Class R shares an annual
fee of 0.50% of average daily net assets. These payments will consist of an asset-based fee of 0.25%
and a service fee of 0.25%. Invesco Distributors will make payments to dealers and institutions based on
the average net asset value of Class R shares that are attributable to shareholders for whom the dealers
and institutions are designated as dealers of record.
The Trust (on behalf of any class of any Invesco Fund) or Invesco Distributors may
terminate the Distribution Agreements on 60 days’ written notice without penalty. The Distribution Agreements will terminate automatically in the event of its assignment.
Total sales charges (front end and CDSCs) paid in connection with the sale of shares
of each class of each Fund, if applicable, for the last three fiscal years or periods, as applicable,
are found in Appendix M.
Distribution Plans
The Trust has adopted three different forms of distribution plans pursuant to Rule
12b-1 under the 1940 Act for the Funds’ Class A shares, Class A2 shares, Class AX shares, Class C shares, Class CX shares, Class R shares, Investor Class shares and Invesco Cash Reserve shares, as applicable
(each, a Plan, and together, the Plans).
Each Fund listed below, pursuant to its Compensation Plan for Class A (except Invesco
Corporate Bond Fund, Invesco Government Money Market Fund, Invesco Intermediate Bond Factor Fund, Invesco Real Estate Fund and Invesco Short Term Bond Fund), Class A2, Class C (except Invesco Corporate
Bond Fund),
134
Class R and Invesco Cash Reserve Shares Plans, as applicable, pays Invesco Distributors
compensation at the annual rate, shown immediately below, of the Fund’s average daily net assets of the applicable class.
|
Fund
|
Class A
|
Class A2
|
Class C
|
Class R
|
Invesco Cash Reserve
|
|
Invesco Corporate Bond Fund
|
See below
|
N/A
|
See below
|
0.50%
|
N/A
|
|
Invesco Global Real Estate Fund
|
0.25%
|
N/A
|
1.00%
|
0.50%
|
N/A
|
|
Invesco Government Money Market Fund
|
See below
|
N/A
|
0.75%
|
0.40%
|
0.15%
|
|
Invesco High Yield Fund
|
0.25%
|
N/A
|
1.00%
|
N/A
|
N/A
|
|
Invesco Income Fund
|
0.25%
|
N/A
|
1.00%
|
0.50%
|
N/A
|
|
Invesco Intermediate Bond Factor Fund
|
See below
|
N/A
|
1.00%
|
0.50%
|
N/A
|
|
Invesco Real Estate Fund
|
See below
|
N/A
|
1.00%
|
0.50%
|
N/A
|
|
Invesco Short Duration Inflation Protected Fund
|
0.25%
|
0.15%
|
N/A
|
N/A
|
N/A
|
|
Invesco Short Term Bond Fund
|
See below
|
N/A
|
0.65%
|
0.50%
|
N/A
|
|
Invesco U.S. Government Money Portfolio
|
N/A
|
N/A
|
1.00%
|
0.50%
|
0.15%
|
Each Fund listed below, pursuant to its Reimbursement Plan (Distribution and Service)
for Class A (for Invesco Corporate Bond Fund, Invesco Government Money Market Fund, Invesco Intermediate Bond Factor Fund, Invesco Real Estate Fund and Invesco Short Term Bond Fund only), Class AX, Class
C (for Invesco Corporate Bond Fund only), Class CX and Investor Class Plans, as applicable, reimburses
Invesco Distributors in an amount up to the following annual rates, shown immediately below, of the Fund’s average daily net assets of the applicable class.
|
Fund
|
Class A
|
Class AX
|
Class C
|
Class CX
|
Investor Class
|
|
Invesco Corporate Bond Fund
|
0.25%
|
N/A
|
1.00%
|
N/A
|
N/A
|
|
Invesco Government Money Market Fund
|
See below
|
0.15%
|
See above
|
0.90%
|
N/A
|
|
Invesco High Yield Fund
|
See above
|
N/A
|
See above
|
N/A
|
0.25%
|
|
Invesco Income Fund
|
See above
|
N/A
|
See above
|
N/A
|
0.25%
|
|
Invesco Real Estate Fund
|
0.25%
|
N/A
|
See above
|
N/A
|
0.25%
|
|
Invesco Short Term Bond Fund
|
0.15%
|
N/A
|
See above
|
N/A
|
N/A
|
The following Funds, pursuant to their Reimbursement Plan (Service Only), reimburses
Invesco Distributors in an amount up to the annual rate, shown immediately below, of the Fund's
average daily net assets of Class A shares.
|
Fund
|
Class A
|
|
Invesco Government Money Market Fund
|
0.20%
|
|
Invesco Intermediate Bond Factor Fund
|
0.25%
|
The Compensation Plan compensates and the Reimbursement Plan (Distribution and Service)
reimburses Invesco Distributors for expenses incurred for the purpose of financing
any activity that is primarily intended to result in the sale of shares of the Funds. Such activities include, but
are not limited to, the following: printing and distributing prospectuses and reports used for sales purposes,
preparing and distributing sales literature (and any related services), advertisements, payment
of dealer commissions and wholesaler compensation in connection with sales of certain Fund's Class A and Class
AX shares exceeding a certain amount set forth in the prospectus for such Fund (for which the Fund imposes
no sales charge) and other distribution-related services permitted by Rule 12b-1. The Reimbursement Plan
(Service Only) reimburses Invesco Distributors for expenses incurred for shareholder services provided
for existing shareholders of a Fund.
Invesco Distributors has contractually agreed through June 30, 2024, to waive 12b-1
fees to the extent necessary to limit 12b-1 fees to 0.50% of average net assets of Invesco Short Term Bond Fund’s Class C shares. The contractual fee waiver is set forth in the Fee Table to the Fund’s Prospectus and may not be terminated or amended to the Fund’s detriment during the period stated in the agreement between Invesco Distributors and the Fund.
Payments pursuant to the Plans are subject to any applicable limitations imposed by
FINRA rules.
135
See Appendix N for a list of the amounts paid by each class of shares of each Fund
to Invesco Distributors pursuant to the Plans for the fiscal year ended February 29, 2024, and Appendix O for an estimate by category of the allocation of actual fees paid by each class of shares
of each Fund pursuant to its respective distribution plan for the fiscal year ended February 29, 2024.
As required by Rule 12b-1, the Plans were approved by a majority of the Board, including
a majority of the trustees who are not “interested persons” (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related
to the Plans (the Rule 12b-1 Trustees). In approving the Plans in accordance with the requirements of Rule
12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that
the Plans would benefit each class of the Funds and its respective shareholders.
The anticipated benefits that may result from the Plans with respect to each Fund
and/or the classes of each Fund and its shareholders include but are not limited to the following: (i) an
increase in assets which may result in a diversified shareholder base, thereby reducing the outflow risk to
other shareholders in the Funds; (ii) an increase in assets which may reduce expenses as fixed dollar costs
are allocated across a larger asset base and/or allow a Fund to reach advisory fee breakpoints; and (iii)
increased scale could increase the likelihood of name recognition and the profile of a Fund in its asset
space, thereby improving the momentum for asset generation.
Unless terminated earlier in accordance with their terms, the Plans continue from
year to year as long as such continuance is specifically approved at least annually by the Board, including
a majority of the Rule 12b-1 Trustees. A Plan may be terminated at any time in whole or with respect to a
Fund or class by the vote of a majority of the Rule 12b-1 Trustees or by the vote of a majority of the outstanding
voting securities of that class.
Any amendment to the Plans that would increase materially the distribution expenses
paid by the applicable class requires shareholder approval; otherwise, the Plans may be amended
by the trustees, including a majority of the Rule 12b-1 Trustees, by votes cast at a meeting called
for the purpose of voting upon such amendment. As long as the Plans are in effect, the Board shall satisfy the
fund governance standards as defined in Rule 0-1(a)(7) under the 1940 Act.
The Compensation Plans obligate the Funds to pay Invesco Distributors the full amount
of the distribution and service fees reflected on the schedules to those plans. Thus, even if Invesco Distributors’ actual allocated share of expenses exceeds the fee payable to Invesco Distributors at any given time,
under the Compensation Plan, the Funds will not be obligated to pay more than that fee. If Invesco Distributors’ actual allocated share of expenses is less than the fee it receives, under the Compensation
Plan, Invesco Distributors will retain the full amount of the fee.
The Reimbursement Plans obligate the Funds to pay Invesco Distributors up to the lesser
of (i) the amount of the distribution and/or service fees reflected on the schedules to those
plans and (ii) the actual costs of the distribution and/or shareholder servicing services provided by or through
Invesco Distributors. Reimbursement will be made through payments made periodically on such basis as reflected
in the Reimbursement Plans by the Funds to Invesco Distributors. If Invesco Distributors’ actual allocated share of expenses incurred pursuant to the Reimbursement Plans for the period exceeds the annual
cap reflected on the schedule to the Plan, a Fund will not be obligated to pay more than the annual cap. If Invesco Distributors’ actual allocated share of expenses incurred pursuant to the Reimbursement Plans for
the period is less than the annual cap, Invesco Distributors is entitled to be reimbursed only for its actual
allocated share of expenses.
Invesco Distributors may from time to time waive or reduce any portion of its 12b-1
fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, Invesco Distributors will retain its ability
to be reimbursed for such fee prior to the end of the respective fiscal year in which the voluntary fee waiver or
reduction was made.
Invesco Distributors has voluntarily undertaken to waive or reduce 12b-1 fees to the
extent necessary to assist Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio in
attempting
136
to maintain a positive yield. There is no guarantee that Invesco Government Money
Market Fund and Invesco U.S. Government Money Portfolio will maintain a positive yield. That undertaking may
be amended or rescinded at any time.
Payments made pursuant to the Rule 12b-1 Plans discussed above may continue for Funds
or share classes that are in limited offering or closed to new investors.
The Funds may pay a service fee of up to the cap disclosed in each Fund’s Plan and in any case no greater than 0.25% of the average daily net assets of the Class A, Class C, Class
CX, Class R and Investor Class shares, 0.15% of the average daily net assets of Class A2, Cash Reserve, Class
AX and Class S shares, 0.15% of the average daily net assets of the Class A shares of Invesco Short
Term Bond Fund, 0.20% of the average daily net assets of the Class A shares of Invesco Government Money
Market Fund and 0.10% of the average daily net assets of Class P shares, attributable to the customers’ selected dealers and financial institutions to such dealers and financial institutions, including Invesco Distributors,
acting as principal, who furnish continuing personal shareholder services and/or maintenance of accounts to
their customers who purchase and own the applicable class of shares of the Fund. Under the terms of a
shareholder service agreement, such personal shareholder services and/or maintenance of accounts may include,
but are not limited to, assisting in establishing and maintaining customer accounts and records,
assisting with purchase and redemption requests, arranging for bank wires, monitoring dividend payments from
a Fund on behalf of customers, forwarding certain shareholder communications from a Fund to customers,
receiving and answering correspondence, aiding in maintaining the investment of their respective
customers in a Fund and providing such other information and services as reasonably requested. Any amounts
not paid as a service fee under each Plan would constitute an asset-based sales charge.
The Funds may agree to pay fees to selected dealers and other institutions who render
the foregoing services to their customers subject to an agreement. Fees shall be paid only to those
selected dealers or other institutions who are dealers or institutions of record at the close of business
on the last business day of the applicable payment period for the account in which such Fund’s shares are held.
Selected dealers and other institutions entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one particular class over another.
Under the Plans, certain financial institutions which have entered into service agreements and which sell shares
of the Funds, may receive payments from the Funds pursuant to the Plans in an amount not to exceed the
maximum annual rate to be paid to Invesco Distributors under the Plans. These payments are an obligation
of the Funds and not of Invesco Distributors.
Because of fluctuations in net asset value, the Plans’ fees with respect to a particular Class C share may be greater or less than the amount of the initial commission (including carrying cost)
paid by Invesco Distributors with respect to such share. In such circumstances, a shareholder of a
share may be deemed to incur expenses attributable to other shareholders of such class.
FINANCIAL STATEMENTS
The audited financial statements for the Funds' most recent fiscal year ended February 29, 2024, including the notes thereto and the reports of PricewaterhouseCoopers LLP thereon,
are incorporated by reference to the annual report to shareholders contained in the Funds' Form N-CSR filed on May 2, 2024.
The portions of such Annual Reports that are not specifically listed above are not
incorporated by reference into this SAI and are not a part of this Registration Statement.
137
APPENDIX A - RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's,
S&P, and Fitch.
Moody's Long-Term Debt Ratings
Aaa: Obligations rated 'Aaa' are judged to be of the highest quality, subject to the
lowest level of credit risk.
Aa: Obligations rated 'Aa' are judged to be of high quality and are subject to very
low credit risk.
A: Obligations rated 'A' are judged to be upper-medium grade and are subject to low
credit risk.
Baa: Obligations rated 'Baa' are judged to be medium-grade and subject to moderate credit
risk and as such may possess certain speculative characteristics.
Ba: Obligations rated 'Ba' are judged to be speculative and are subject to substantial
credit risk.
B: Obligations rated 'B' are considered speculative and are subject to high credit
risk.
Caa: Obligations rated 'Caa' are judged to be speculative of poor standing and are subject
to very high credit risk.
Ca: Obligations rated 'Ca' are highly speculative and are likely in, or very near, default,
with some prospect of recovery of principal and interest.
C: Obligations rated 'C' are the lowest rated and are typically in default, with little
prospect for recovery of principal or interest.
Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification
from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms*.
* By their terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid
securities may also be subject to contractually allowable write-downs of principal that could result in
impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security
is an expression of the relative credit risk associated with that security.
Moody's Short-Term Prime Rating System
P-1: Ratings of Prime-1 reflect a superior ability to repay short-term obligations.
P-2: Ratings of Prime-2 reflect a strong ability to repay short-term obligations.
P-3: Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.
NP (Not Prime): Issuers (or supporting institutions) rated Not Prime do not fall within any of the
Prime rating categories.
Moody's MIG/VMIG US Short-Term Ratings
Short-Term Obligation Ratings
We use the global short-term Prime rating scale for commercial paper issued by US
municipalities and nonprofits. These commercial paper programs may be backed by external letters of credit
or liquidity facilities, or by an issuer’s self-liquidity.
For other short-term municipal obligations, we use one of two other short-term rating
scales, the Municipal Investment Grade (MIG) and Variable Municipal Investment Grade (VMIG) scales discussed
below.
A-1
We use the MIG scale for US municipal cash flow notes, bond anticipation notes and
certain other short-term obligations, which typically mature in three years or less. Under certain circumstances,
we use the MIG scale for bond anticipation notes with maturities of up to five years.
MIG 1: This designation denotes superior credit quality. Excellent protection is afforded
by established cash flows, highly reliable liquidity support, or demonstrated broad-based access
to the market for refinancing.
MIG 2: This designation denotes strong credit quality. Margins of protection are ample,
although not as large as in the preceding group.
MIG 3: This designation denotes acceptable credit quality. Liquidity and cash-flow protection
may be narrow, and market access for refinancing is likely to be less well-established.
SG: This designation denotes speculative-grade credit quality. Debt instruments in this
category may lack sufficient margins of protection.
VMIG Ratings
For variable rate demand obligations (VRDOs), Moody’s assigns both a long-term rating and a short-term payment obligation rating. The long-term rating addresses the issuer’s ability to meet scheduled principal and interest payments. The short-term payment obligation rating addresses the ability
of the issuer or the liquidity provider to meet any purchase price payment obligation resulting from optional tenders (“on demand”) and/or mandatory tenders of the VRDO. The short-term payment obligation rating uses the VMIG
scale. Transitions of VMIG ratings with conditional liquidity support differ from transitions of Prime
ratings reflecting the risk that external liquidity support will terminate if the issuer’s long-term rating drops below investment grade. Please see our methodology that discusses obligations with conditional liquidity support.
For VRDOs, we typically assign a VMIG rating if the frequency of the payment obligation
is less than every three years. If the frequency of the payment obligation is less than three years,
but the obligation is payable only with remarketing proceeds, the VMIG short-term rating is not assigned and it is denoted as “NR”.
Industrial development bonds in the US where the obligor is a corporate may carry
a VMIG rating that reflects Moody’s view of the relative likelihood of default and loss. In these cases, liquidity assessment is based on the liquidity of the corporate obligor.
VMIG Scale
VMIG 1: This designation denotes superior credit quality. Excellent protection is afforded
by the superior short-term credit strength of the liquidity provider and structural and legal protections.
VMIG 2: This designation denotes strong credit quality. Good protection is afforded by the
strong short-term credit strength of the liquidity provider and structural and legal protections.
VMIG 3: This designation denotes acceptable credit quality. Adequate protection is afforded
by the satisfactory short-term credit strength of the liquidity provider and structural and
legal protections.
SG: This designation denotes speculative-grade credit quality. Demand features rated
in this category may be supported by a liquidity provider that does not have a sufficiently strong
short-term rating or may lack the structural or legal protections.
Standard & Poor's Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on S&P Global Ratings’ analysis of the following considerations:
●
The likelihood of payment--the capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the obligation;
●
The nature and provisions of the financial obligation, and the promise we impute;
and
A-2
●
The protection afforded by, and relative position of, the financial obligation in
the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
An issue rating is an assessment of default risk but may incorporate an assessment
of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated
lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation may
apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating
company and holding company obligations.)
AAA: An obligation rated 'AAA' has the highest rating assigned by S&P Global Ratings.
The obligor's capacity to meet its financial commitments on the obligation is extremely strong.
AA: An obligation rated 'AA' differs from the highest-rated obligations only to a small
degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.
A: An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial commitments on the obligation is still strong.
BBB: An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitments on the obligation.
BB, B, CCC, CC and C: Obligations rated 'BB', 'B', 'CCC' 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation
and 'C' the highest. While such obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposure to adverse conditions.
BB: An obligation rated 'BB' is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to the obligor's inadequate capacity to meet its financial commitments
on the obligation.
B: An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse
business, financial, or economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitments on the obligation.
CCC: An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its financial
commitments on the obligation. In the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial commitments on the obligation.
CC: An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC'
rating is used when a default has not yet occurred but S&P Global Ratings expects default to be a virtual
certainty, regardless of the anticipated time to default.
C: An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation
is expected to have lower relative seniority or lower ultimate recovery compared with obligations
that are rated higher.
D: An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid
capital instruments, the 'D' rating category is used when payments on an obligation are not
made on the date due, unless S&P Global Ratings believes that such payments will be made within five
business days in the absence of a stated grace period or within the earlier of the stated grace period
or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or
the taking of similar action and where default on an obligation is a virtual certainty, for example due
to automatic stay provisions. An obligation's rating is lowered to 'D' if it is subject to a distressed
exchange offer.
A-3
Plus (+) or minus (-): The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
NR: This indicates that no rating has been requested, or that there is insufficient
information on which to base a rating, or that S&P Global Ratings does not rate a particular obligation as
a matter of policy.
Standard & Poor's Short-Term Issue Credit Ratings
A-1: A short-term obligation rated 'A-1' is rated in the highest category by S&P Global
Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's
capacity to meet its financial commitments on these obligations is extremely strong.
A-2: A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.
A-3: A short-term obligation rated 'A-3' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to weaken an obligor's
capacity to meet its financial commitments on the obligation.
B: A short-term obligation rated 'B' is regarded as vulnerable and has significant
speculative characteristics. The obligor currently has the capacity to meet its financial commitments;
however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity
to meet its financial commitments.
C: A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its
financial commitments on the obligation.
D: A short-term obligation rated 'D' is in default or in breach of an imputed promise.
For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation
are not made on the date due, unless S&P Global Ratings believes that such payments will be made within
any stated grace period. However, any stated grace period longer than five business days will be treated
as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or
the taking of a similar action and where default on an obligation is a virtual certainty, for example due
to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed
debt restructuring.
Standard & Poor's Municipal Short-Term Note Ratings Definitions
An S&P Global Ratings U.S. municipal note rating reflects S&P Global Ratings’ opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less
will likely receive a note rating. Notes with an original maturity of more than three years will most likely
receive a long-term debt rating. In determining which type of rating, if any, to assign, S&P Global Ratings’ analysis will review the following considerations:
●
Amortization schedule -- the larger final maturity relative to other maturities, the
more likely it will be treated as a note; and
●
Source of payment -- the more dependent the issue is on the market for its refinancing,
the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1: Strong capacity to pay principal and interest. An issue determined to possess a
very strong capacity to pay debt service is given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
A-4
SP-3: Speculative capacity to pay principal and interest.
D: ‘D’ is assigned upon failure to pay the note when due, completion of a distressed exchange offer, or the filing of a bankruptcy petition or the taking of similar action and where default
on an obligation is a virtual certainty, for example due to automatic stay provisions.
Standard & Poor's Dual Ratings
Dual ratings may be assigned to debt issues that have a put option or demand feature.
The first component of the rating addresses the likelihood of repayment of principal and interest
as due, and the second component of the rating addresses only the demand feature. The first component
of the rating can relate to either a short-term or long-term transaction and accordingly use either
short-term or long-term rating symbols. The second component of the rating relates to the put option and is assigned
a short-term rating symbol (for example, 'AAA/A-1+' or 'A-1+/A-1'). With U.S. municipal short-term demand
debt, the U.S. municipal short-term note rating symbols are used for the first component of the rating
(for example, 'SP-1+/A-1+').
Fitch Credit Rating Scales
Fitch Ratings publishes credit ratings that are forward-looking opinions on the relative
ability of an entity or obligation to meet financial commitments. Issuer default ratings (IDRs) are assigned
to corporations, sovereign entities, financial institutions such as banks, leasing companies and insurers,
and public finance entities (local and regional governments). Issue level ratings are also assigned,
often include an expectation of recovery and may be notched above or below the issuer level rating. Issue ratings
are assigned to secured and unsecured debt securities, loans, preferred stock and other instruments, Structured
finance ratings are issue ratings to securities backed by receivables or other financial assets that consider the obligations’ relative vulnerability to default. Credit ratings are indications of the likelihood
of repayment in accordance with the terms of the issuance. In limited cases, Fitch may include additional considerations
(i.e., rate to a higher or lower standard than that implied in the obligation’s documentation). Please see the section Specific Limitations Relating to Credit Rating Scales for details. Fitch Ratings also publishes
other ratings, scores and opinions. For example, Fitch provides specialized ratings of servicers of residential
and commercial mortgages, asset managers and funds. In each case, users should refer to the definitions
of each individual scale for guidance on the dimensions of risk covered in each assessment.
Fitch’s credit rating scale for issuers and issues is expressed using the categories ‘AAA’ to ‘BBB’ (investment grade) and ‘BB’ to ‘D’ (speculative grade) with an additional +/-for AA through CCC levels indicating relative differences of probability of default or recovery for issues.
The terms “investment grade” and “speculative grade” are market conventions and do not imply any recommendation or endorsement of a specific security for investment purposes. Investment
grade categories indicate relatively low to moderate credit risk, while ratings in the speculative
categories signal either a higher level of credit risk or that a default has already occurred.
Fitch may also disclose issues relating to a rated issuer that are not and have not
been rated. Such issues are also denoted as ‘NR’ on its web page.
Credit ratings express risk in relative rank order, which is to say they are ordinal
measures of credit risk and are not predictive of a specific frequency of default or loss. For information
about the historical performance of ratings, please refer to Fitch’s Ratings Transition and Default studies, which detail the historical default rates. The European Securities and Markets Authority also maintains
a central repository of historical default rates.
Fitch’s credit ratings do not directly address any risk other than credit risk. Credit ratings do not deal with the risk of market value loss due to changes in interest rates, liquidity and/or other
market considerations. However, market risk may be considered to the extent that it influences the ability
of an issuer to pay or refinance a financial commitment. Ratings nonetheless do not reflect market risk to
the extent that they
A-5
influence the size or other conditionality of the obligation to pay upon a commitment
(for example, in the case of payments linked to performance of an equity index).
Fitch will use credit rating scales to provide ratings to privately issued obligations
or certain note issuance programs, or for private ratings using the same public scale and criteria. Private
ratings are not published, and are only provided to the issuer or its agents in the form of a rating letter. The
primary credit rating scales may also be used to provide ratings for a narrower scope, including interest strips and
return of principal or in other forms of opinions such as Credit Opinions or Rating Assessment Services.
Credit Opinions are either a notch- or category-specific view using the primary rating
scale and omit one or more characteristics of a full rating or meet them to a different standard. Credit
Opinions will be indicated using a lower-case letter symbol combined with either an ‘*’ (e.g. ‘bbb+*’) or (cat) suffix to denote the opinion status. Credit Opinions will be typically point-in-time but may be monitored if the
analytical group believes information will be sufficiently available.
Rating Assessment Services are a notch-specific view using the primary rating scale
of how an existing or potential rating may be changed by a given set of hypothetical circumstances. While
Credit Opinions and Rating Assessment Services are point-in-time and are not monitored, they may have
a directional Watch or Outlook assigned, which can signify the trajectory of the credit profile.
Ratings assigned by Fitch are opinions based on established, approved and published
criteria. A variation to criteria may be applied but will be explicitly cited in our rating action commentaries
(RACs), which are used to publish credit ratings when established and upon annual or periodic reviews.
Ratings are the collective work product of Fitch, and no individual, or group of individuals,
is solely responsible for a rating. Ratings are not facts and, therefore, cannot be described
as being "accurate" or "inaccurate." Users should refer to the definition of each individual rating for guidance
on the dimensions of risk covered by the rating.
Fitch Long-Term Rating Scales
Issuer Default Ratings
Rated entities in a number of sectors, including financial and non-financial corporations,
sovereigns, insurance companies and certain sectors within public finance, are generally assigned
Issuer Default Ratings (IDRs). IDRs are also assigned to certain entities in global infrastructure and project
finance. IDRs opine on an entity's relative vulnerability to default on financial obligations. The threshold
default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect
the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative
receivership or similar concepts.
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency's view
of their relative vulnerability to default, rather than a prediction of a specific percentage likelihood
of default.
AAA: Highest credit quality.
'AAA' ratings denote the lowest expectation of default risk. They are assigned only
in cases of exceptionally strong capacity for payment of financial commitments. This capacity
is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality.
'AA' ratings denote expectations of very low default risk. They indicate very strong
capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable
events.
A-6
A: High credit quality.
'A' ratings denote expectations of low default risk. The capacity for payment of financial
commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher ratings.
BBB: Good credit quality.
'BBB' ratings indicate that expectations of default risk are currently low. The capacity
for payment of financial commitments is considered adequate, but adverse business or economic conditions
are more likely to impair this capacity.
BB: Speculative.
'BB' ratings indicate an elevated vulnerability to default risk, particularly in the
event of adverse changes in business or economic conditions over time; however, business or financial flexibility
exists that supports the servicing of financial commitments.
B: Highly speculative.
'B' ratings indicate that material default risk is present, but a limited margin of
safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable
to deterioration in the business and economic environment.
CCC: Substantial credit risk.
Very low margin of safety. Default is a real possibility.
CC: Very high levels of credit risk.
Default of some kind appears probable.
C: Near default
A default or default-like process has begun, or the issuer is in standstill, or for
a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a 'C'
category rating for an issuer include:
a. the issuer has entered into a grace or cure period following non-payment of a material
financial obligation;
b. the issuer has entered into a temporary negotiated waiver or standstill agreement
following a payment default on a material financial obligation; or
c. the formal announcement by the issuer or their agent of a distressed debt exchange;
d. a closed financing vehicle where payment capacity is irrevocably impaired such
that it is not expected to pay interest and/or principal in full during the life of the transaction, but where
no payment default is imminent
RD: Restricted default.
‘RD’ ratings indicate an issuer that in Fitch’s opinion has experienced:
a. an uncured payment default or distressed debt exchange on a bond, loan or other
material financial obligation, but
b. has not entered into bankruptcy filings, administration, receivership, liquidation,
or other formal winding-up procedure, and
c. has not otherwise ceased operating.
This would include:
A-7
i. the selective payment default on a specific class or currency of debt;
ii. the uncured expiry of any applicable grace period, cure period or default forbearance
period following a payment default on a bank loan, capital markets security or other material financial
obligation;
iii. the extension of multiple waivers or forbearance periods upon a payment default
on one or more material financial obligations, either in series or in parallel; ordinary execution
of a distressed debt exchange on one or more material financial obligations.
D: Default.
'D' ratings indicate an issuer that in Fitch Ratings' opinion has entered into bankruptcy
filings, administration, receivership, liquidation or other formal winding-up procedure or
which has otherwise ceased business.
Default ratings are not assigned prospectively to entities or their obligations; within
this context, non-payment on an instrument that contains a deferral feature or grace period will generally
not be considered a default until after the expiration of the deferral or grace period, unless a default
is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.
In all cases, the assignment of a default rating reflects the agency's opinion as
to the most appropriate rating category consistent with the rest of its universe of ratings and may differ
from the definition of default under the terms of an issuer's financial obligations or local commercial practice.
Notes
The modifiers + or - may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the 'AAA' Long-Term IDR category, or to Long-Term IDR
categories below 'B'.
Fitch Short-Term Ratings Assigned to Issuers and Obligations
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability
to default of the rated entity and relates to the capacity to meet financial obligations in accordance
with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for
loss severity. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as "short term"
based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured
obligations and up to 36 months for obligations in U.S. public finance markets.
F1: Highest Short-Term Credit Quality. Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency’s National Rating scale, this rating is assigned to the lowest default risk relative to other
in the same country or monetary union. Where the liquidity profile is particularly strong, a “+” is added to the assigned rating.
F2: Good Short-Term Credit Quality. Indicates a good capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union. However, the margin of safety is not as great as in the case of the higher ratings.
F3: Fair Short-Term Credit Quality. Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union.
B: Speculative Short-Term Credit Quality. Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country
or monetary union.
C: High Short-Term Default Risk. Indicates a highly uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union.
RD: Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable
to entity ratings only.
D: Default. Indicates a broad-based default event for an entity, or the default of a short-term
obligation.
A-8
APPENDIX B - PERSONS TO WHOM INVESCO PROVIDES NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS
(as of May 31, 2023)
|
Service Provider
|
Disclosure Category
|
|
ABN AMRO Financial Services, Inc.
|
Broker (for certain Invesco Funds)
|
|
Absolute Color
|
Financial Printer
|
|
Anglemyer & Co.
|
Analyst (for certain Invesco Funds)
|
|
AXA
|
Other
|
|
Ballard Spahr Andrews & Ingersoll,
LLP
|
Special Insurance Counsel
|
|
Barclays Capital, Inc.
|
Broker (for certain Invesco Funds)
|
|
Blaylock Robert Van LLC
|
Broker (for certain Invesco Funds)
|
|
BB&T Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Bear Stearns Pricing Direct, Inc.
|
Pricing Vendor (for certain Invesco Funds)
|
|
BLNS Securities Ltd.
|
Broker (for certain Invesco Funds)
|
|
BOSC, Inc.
|
Broker (for certain Invesco Funds)
|
|
Brown Brothers Harriman & Co.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
Cabrera Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Charles River Systems, Inc.
|
System Provider
|
|
Chas. P. Young Co.
|
Financial Printer
|
|
Cirrus Research, LLC
|
Trading System
|
|
Citibank, N.A.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
Citigroup Global Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Commerce Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Crane Data, LLC
|
Analyst (for certain Invesco Funds)
|
|
Credit Suisse International / Credit
Suisse Securities (Europe) Ltd.
|
Service Provider
|
|
Crews & Associates
|
Broker (for certain Invesco Funds)
|
|
D.A. Davidson & Co.
|
Broker (for certain Invesco Funds)
|
|
Dechert LLP
|
Legal Counsel
|
|
DEPFA First Albany
|
Broker (for certain Invesco Funds)
|
|
Deutsche Bank Trust Company
Americas
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
E.K. Riley Investments LLC
|
Broker (for certain Invesco Funds)
|
|
Empirical Research Partners
|
Analyst (for certain Invesco Funds)
|
|
Finacorp Securities
|
Broker (for certain Invesco Funds)
|
|
First Miami Securities
|
Broker (for certain Invesco Funds)
|
|
First Southwest Co.
|
Broker (for certain Invesco Funds)
|
|
First Tryon Securities
|
Broker (for certain Invesco Funds)
|
|
Fitch, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
FT Interactive Data Corporation
|
Pricing Vendor
|
|
FTN Financial Group
|
Broker (for certain Invesco Funds)
|
|
GainsKeeper
|
Software Provider (for certain Invesco Funds)
|
|
GCom2 Solutions
|
Software Provider (for certain Invesco Funds)
|
|
George K. Baum & Company
|
Broker (for certain Invesco Funds)
|
|
Glass, Lewis & Co.
|
System Provider (for certain Invesco Funds)
|
|
Global Trading Analytics, LLC
|
Software Provider
|
|
Global Trend Alert
|
Analyst (for certain Invesco Funds)
|
|
Hattier, Sanford & Reynoir
|
Broker (for certain Invesco Funds)
|
|
Hutchinson, Shockey, Erley & Co.
|
Broker (for certain Invesco Funds)
|
|
ICI (Investment Company Institute)
|
Analyst (for certain Invesco Funds)
|
|
ICRA Online Ltd.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
B-1
|
Service Provider
|
Disclosure Category
|
|
Lincoln Investment Advisors
Corporation
|
Other
|
|
iMoneyNet, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Initram Data, Inc.
|
Pricing Vendor
|
|
Institutional Shareholder Services,
Inc.
|
Proxy Voting Service (for certain Invesco Funds)
|
|
Invesco Investment Services, Inc.
|
Transfer Agent
|
|
Invesco Senior Secured
Management, Inc.
|
System Provider (for certain Invesco Funds)
|
|
Investment Company Institute
|
Analyst (for certain Invesco Funds)
|
|
Investortools, Inc.
|
Broker (for certain Invesco Funds)
|
|
ITG, Inc.
|
Pricing Vendor (for certain Invesco Funds)
|
|
J.P. Morgan Chase Bank
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
J.P. Morgan Securities, Inc.
|
Analyst (for certain Invesco Funds)
|
|
J.P. Morgan Securities Inc./Citigroup
Global Markets Inc./JPMorgan
Chase Bank, N.A.
|
Lender (for certain Invesco Funds)
|
|
J.P. Morgan Securities
|
Broker (for certain Invesco Funds)
|
|
Janney Montgomery Scott LLC
|
Broker (for certain Invesco Funds)
|
|
John Hancock Investment
Management Services, LLC
|
Sub-advisor (for certain sub-advised accounts)
|
|
Jorden Burt LLP
|
Special Insurance Counsel
|
|
KeyBanc Capital Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Kramer Levin Naftalis & Frankel LLP
|
Legal Counsel
|
|
Lebenthal & Co. LLC
|
Broker (for certain Invesco Funds)
|
|
Lipper, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Loan Pricing Corporation
|
Pricing Service (for certain Invesco Funds)
|
|
Loop Capital Markets
|
Broker (for certain Invesco Funds)
|
|
M.R. Beal
|
Broker (for certain Invesco Funds)
|
|
MarkIt Group Limited
|
Pricing Vendor (for certain Invesco Funds)
|
|
Merrill Communications LLC
|
Financial Printer
|
|
Mesirow Financial, Inc.
|
Broker (for certain Invesco Funds)
|
|
Middle Office Solutions
|
Software Provider
|
|
Moody's Investors Service
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Morgan Keegan & Company, Inc.
|
Broker (for certain Invesco Funds)
|
|
Morrison Foerster LLP
|
Legal Counsel
|
|
MS Securities Services, Inc. and
Morgan Stanley & Co. Incorporated
|
Securities Lender (for certain Invesco Funds)
|
|
Muzea Insider Consulting Services,
LLC
|
Analyst (for certain Invesco Funds)
|
|
Ness USA Inc.
|
System provider
|
|
Noah Financial, LLC
|
Analyst (for certain Invesco Funds)
|
|
Omgeo LLC
|
Trading System
|
|
Piper Jaffray
|
Analyst (for certain Invesco Funds)
|
|
Prager, Sealy & Co.
|
Broker (for certain Invesco Funds)
|
|
PricewaterhouseCoopers LLP
|
Independent Registered Public Accounting Firm (for all Invesco Funds)
|
|
Protective Securities
|
Broker (for certain Invesco Funds)
|
|
Ramirez & Co., Inc.
|
Broker (for certain Invesco Funds)
|
|
Raymond James & Associates, Inc.
|
Broker (for certain Invesco Funds)
|
|
RBC Capital Markets
|
Analyst (for certain Invesco Funds)
|
|
RBC Dain Rauscher Incorporated
|
Broker (for certain Invesco Funds)
|
|
Reuters America LLC
|
Pricing Service (for certain Invesco Funds)
|
|
Rice Financial Products
|
Broker (for certain Invesco Funds)
|
|
Robert W. Baird & Co. Incorporated
|
Broker (for certain Invesco Funds)
|
B-2
|
Service Provider
|
Disclosure Category
|
|
RR Donnelley Financial
|
Financial Printer
|
|
Ryan Beck & Co.
|
Broker (for certain Invesco Funds)
|
|
SAMCO Capital Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Seattle-Northwest Securities
Corporation
|
Broker (for certain Invesco Funds)
|
|
Siebert Brandford Shank & Co.,
L.L.C.
|
Broker (for certain Invesco Funds)
|
|
Simon Printing Company
|
Financial Printer
|
|
Southwest Precision Printers, Inc.
|
Financial Printer
|
|
Southwest Securities
|
Broker (for certain Invesco Funds)
|
|
Standard and Poor's/Standard and
Poor's Securities Evaluations, Inc.
|
Pricing Service and Rating and Ranking Agency (each, respectively, for certain Invesco
Funds)
|
|
StarCompliance, Inc.
|
System Provider
|
|
State Street Bank and Trust
Company
|
Custodian, Lender, Securities Lender, and System Provider (each, respectively, for
certain
Invesco Funds)
|
|
Sterne, Agee & Leach, Inc.
|
Broker (for certain Invesco Funds)
|
|
Stifel, Nicolaus & Company,
Incorporated
|
Broker (for certain Invesco Funds)
|
|
Stradley Ronon Stevens & Young,
LLP
|
Legal Counsel
|
|
The Bank of New York
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
The MacGregor Group, Inc.
|
Software Provider
|
|
The Savader Group LLC
|
Broker (for certain Invesco Funds)
|
|
Thomson Information Services
Incorporated
|
Software Provider
|
|
TradingHub Group Ltd.
|
Analyst (for certain Invesco Funds)
|
|
UBS Financial Services, Inc.
|
Broker (for certain Invesco Funds)
|
|
UMB Bank, N.A.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
VCI Group Inc.
|
Financial Printer
|
|
Vining Sparks IBG
|
Broker (for Certain Invesco Funds)
|
|
W.H Mell Associates, Inc.
|
Broker (for certain Invesco Funds)
|
|
Wachovia National Bank, N.A.
|
Broker (for certain Invesco Funds)
|
|
Western Lithograph
|
Financial Printer
|
|
Wiley Bros. Aintree Capital L.L.C.
|
Broker (for certain Invesco Funds)
|
|
William Blair & Co.
|
Broker (for certain Invesco Funds)
|
|
XSP, LLC/Solutions Plus, Inc.
|
Software Provider
|
B-3
APPENDIX C - TRUSTEES AND OFFICERS
As of May 31, 2024
The address of each trustee and officer is 11 Greenway Plaza, Houston, Texas 77046-1173.
The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's organizational documents. Each officer
serves for a one year term or until their successors are elected and qualified. Column two below includes length
of time served with predecessor entities, if any.
Interested Trustees
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Jeffrey H. Kupor1 - 1968
|
Trustee
|
2024
|
Senior Managing Director
and General Counsel,
Invesco Ltd.; Trustee,
Invesco Foundation, Inc.;
Director, Invesco Advisers,
Inc.; Executive Vice
President, Invesco Asset
Management (Bermuda),
Ltd. and Invesco
Investments (Bermuda)
Ltd.; and Vice President,
Invesco Group Services,
Inc.
Formerly: Head of Legal
of the Americas, Invesco
Ltd.; Senior Vice President
and Secretary, Invesco
Advisers, Inc. (formerly
known as Invesco
Institutional (N.A.), Inc.)
(registered investment
adviser); Secretary,
Invesco Distributors, Inc.
(formerly known as
Invesco AIM Distributors,
Inc.); Vice President and
Secretary, Invesco
Investment Services, Inc.
(formerly known as
Invesco AIM Investment
Services, Inc.); Senior
Vice President, Chief
Legal Officer and
Secretary, The Invesco
Funds; Secretary and
General Counsel, Invesco
Investment Advisers LLC
(formerly known as Van
Kampen Asset
Management); Secretary
and General Counsel,
Invesco Capital Markets,
Inc. (formerly known as
Van Kampen Funds Inc.)
|
164
|
None
|
C-1
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
and Chief Legal Officer,
Invesco Exchange-Traded
Fund Trust, Invesco
Exchange-Traded Fund
Trust II, Invesco India
Exchange-Traded Fund
Trust, Invesco Actively
Managed Exchange-
Traded Fund Trust,
Invesco Actively Managed
Exchange-Traded
Commodity Fund Trust
and Invesco Exchange-
Traded Self-Indexed Fund
Trust; Secretary and Vice
President, Harbourview
Asset Management
Corporation; Secretary
and Vice President,
Oppenheimer Funds, Inc.
and Invesco Managed
Accounts, LLC; Secretary
and Senior Vice President,
OFI Global Institutional,
Inc.; Secretary and Vice
President, OFI SteelPath,
Inc.; Secretary and Vice
President, Oppenheimer
Acquisition Corp.;
Secretary and Vice
President, Shareholder
Services, Inc.; Secretary
and Vice President, Trinity
Investment Management
Corporation, Senior Vice
President, Invesco
Distributors, Inc.;
Secretary and Vice
President, Jemstep, Inc.;
Head of Legal, Worldwide
Institutional, Invesco Ltd.;
Secretary and General
Counsel, INVESCO
Private Capital
Investments, Inc.; Senior
Vice President, Secretary
and General Counsel,
Invesco Management
Group, Inc. (formerly
known as Invesco AIM
Management Group, Inc.);
Assistant Secretary,
INVESCO Asset
Management (Bermuda)
Ltd.; Secretary and
General Counsel, Invesco
Private Capital, Inc.;
|
|
|
C-2
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
Assistant Secretary and
General Counsel,
INVESCO Realty, Inc.;
Secretary and General
Counsel, Invesco Senior
Secured Management,
Inc.; Secretary, Sovereign
G./P. Holdings Inc.;
Secretary, Invesco
Indexing LLC; and
Secretary, W.L. Ross &
Co., LLC
|
|
|
|
Douglas Sharp1– 1974
|
Trustee
|
2024
|
Senior Managing Director
and Head of Americas &
EMEA, Invesco Ltd.
Formerly: Director and
Chairman, Invesco UK
Limited; and Director,
Chairman and Chief
Executive, Invesco Fund
Managers Limited
|
164
|
None
|
1.
Mr. Kupor and Mr. Sharp are considered interested persons (within the meaning of the Section 2(a)(19) of the 1940 Act) of the Funds because they are officers of the Adviser, and officers of Invesco Ltd., the ultimate parent of the Adviser.
Independent Trustees
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
|
|
|
|
Beth Ann Brown – 1968
|
Trustee (2019)
and Chair
(2022)
|
2019
|
Independent Consultant
Formerly: Head of
Intermediary Distribution,
Managing Director,
Strategic Relations,
Managing Director, Head
of National Accounts,
Senior Vice President,
National Account Manager
and Senior Vice President,
Key Account Manager,
Columbia Management
Investment Advisers LLC;
and Vice President, Key
Account Manager, Liberty
Funds Distributor, Inc.
|
164
|
Director, Board of
Directors of Caron
Engineering Inc.
Formerly: Advisor,
Board of Advisors of
Caron Engineering
Inc.; President and
Director, Acton
Shapleigh Youth
Conservation Corps
(non-profit); President
and Director of
Grahamtastic
Connection (non-
profit).; and Trustee of
certain Oppenheimer
Funds
|
|
Carol Deckbar – 1962
|
Trustee
|
2024
|
Formerly: Executive Vice
President and Chief
Product Officer, TIAA
Financial Services;
|
164
|
Formerly: Board
Member, TIAA Asset
Management, Inc.; and
Board Member, TH
|
C-3
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
Executive Vice President
and Principal, College
Retirement Equities Fund
at TIAA; Executive Vice
President and Head of
Institutional Investments
and Endowment Services,
TIAA
|
|
Real Estate Group
Holdings Company
|
|
Cynthia Hostetler —1962
|
Trustee
|
2017
|
Non-Executive Director
and Trustee of a number
of public and private
business corporations
Formerly: Director,
Aberdeen Investment
Funds (4 portfolios);
Director, Artio Global
Investment LLC (mutual
fund complex); Director,
Edgen Group, Inc.
(specialized energy and
infrastructure products
distributor); Director,
Genesee & Wyoming, Inc.
(railroads); Head of
Investment Funds and
Private Equity, Overseas
Private Investment
Corporation; President,
First Manhattan
Bancorporation, Inc.; and
Attorney, Simpson
Thacher & Bartlett LLP
|
164
|
Resideo Technologies
(smart home
technology); Vulcan
Materials Company
(construction materials
company); Trilinc
Global Impact Fund;
Investment Company
Institute (professional
organization); and
Independent Directors
Council (professional
organization)
|
|
Eli Jones – 1961
|
Trustee
|
2016
|
Professor and Dean
Emeritus, Mays Business
School at Texas A&M
University
Formerly: Dean of Mays
Business School at Texas
A&M University; Professor
and Dean, Walton College
of Business, University of
Arkansas and E.J. Ourso
College of Business,
Louisiana State University;
and Director, Arvest Bank
|
164
|
Insperity, Inc. (formerly
known as Administaff)
(human resources
provider); Board
Member of the regional
board, First Financial
Bank Texas; and Board
Member, First Financial
Bankshares, Inc. Texas
|
|
Elizabeth Krentzman – 1959
|
Trustee
|
2019
|
Formerly: Principal and
Chief Regulatory Advisor
for Asset Management
Services and U.S. Mutual
Fund Leader of Deloitte &
Touche LLP; General
Counsel of the Investment
Company Institute (trade
|
164
|
Formerly: Member of
the Cartica Funds
Board of Directors
(private investment
funds); Trustee of the
University of Florida
National Board
Foundation; Member of
|
C-4
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
association); National
Director of the Investment
Management Regulatory
Consulting Practice,
Principal, Director and
Senior Manager of
Deloitte & Touche LLP;
Assistant Director of the
Division of Investment
Management - Office of
Disclosure and Investment
Adviser Regulation of the
U.S. Securities and
Exchange Commission
and various positions with
the Division of Investment
Management – Office of
Regulatory Policy of the
U.S. Securities and
Exchange Commission;
and Associate at Ropes &
Gray LLP
|
|
the University of
Florida Law Center
Association, Inc. Board
of Trustees, Audit
Committee and
Membership
Committee; and
Trustee of certain
Oppenheimer Funds
|
|
Anthony J. LaCava, Jr.–
1956
|
Trustee
|
2019
|
Formerly: Director and
Member of the Audit
Committee, Blue Hills
Bank (publicly traded
financial institution) and
Managing Partner, KPMG
LLP
|
164
|
Member and Chairman
of the Bentley
University Business
School Advisory
Council; Formerly:
Board Member and
Chair of the Audit and
Finance Committee
and Nominating
Committee, KPMG LLP
|
|
James “Jim” Liddy – 1959
|
Trustee
|
2024
|
Formerly: Chairman,
Global Financial Services,
Americas and Retired
Partner, KPMG LLP
|
164
|
Director and Treasurer,
Gulfside Place
Condominium
Association, Inc. and
Non-Executive
Director, Kellenberg
Memorial High School
|
|
Prema Mathai-Davis – 1950
|
Trustee
|
1998
|
Formerly: Co-Founder &
Partner of Quantalytics
Research, LLC, (a
FinTech Investment
Research Platform for the
Self-Directed Investor);
Trustee of YWCA
Retirement Fund; CEO of
YWCA of the USA; Board
member of the NY
Metropolitan
Transportation Authority;
Commissioner of the NYC
Department of Aging; and
Board member of Johns
Hopkins Bioethics Institute
|
164
|
Member of Board of
Positive Planet US
(non-profit) and
HealthCare Chaplaincy
Network (non-profit)
|
C-5
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Joel W. Motley – 1952
|
Trustee
|
2019
|
Director of Office of
Finance, Federal Home
Loan Bank System;
Managing Director of
Carmona Motley Inc.
(privately held financial
advisor); Member of the
Council on Foreign
Relations and its Finance
and Budget Committee;
Chairman Emeritus of
Board of Human Rights
Watch and Member of its
Investment Committee;
Member of Investment
Committee and Board of
Historic Hudson Valley
(non-profit cultural
organization); and
Member of the Vestry and
Investment Committee of
Trinity Church Wall Street
Formerly: Managing
Director of Public Capital
Advisors, LLC (privately
held financial advisor);
Managing Director of
Carmona Motley Hoffman,
Inc. (privately held
financial advisor); and
Director of Columbia
Equity Financial Corp.
(privately held financial
advisor)
|
164
|
Member of Board of
Blue Ocean Acquisition
Corp.; Member of
Board of Trust for
Mutual Understanding
(non-profit promoting
the arts and
environment); Member
of Board of Greenwall
Foundation (bioethics
research foundation)
and its Investment
Committee; Member of
Board of Friends of the
LRC (non-profit legal
advocacy); Board
Member and
Investment Committee
Member of Pulitzer
Center for Crisis
Reporting (non-profit
journalism); and
Trustee of certain
Oppenheimer Funds
|
|
Teresa M. Ressel — 1962
|
Trustee
|
2017
|
Non-executive director
and trustee of a number of
public and private
business corporations
Formerly: Chief Executive
Officer, UBS Securities
LLC (investment banking);
Group Chief Operating
Officer, UBS AG Americas
(investment banking); Sr.
Management Team
Olayan America, The
Olayan Group
(international
investor/commercial/industrial);
and Assistant Secretary
for Management & Budget
and Designated Chief
Financial Officer, U.S.
Department of Treasury
|
164
|
None
|
C-6
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Robert C. Troccoli – 1949
|
Trustee
|
2016
|
Formerly: Adjunct
Professor, University of
Denver – Daniels College
of Business; and
Managing Partner, KPMG
LLP
|
164
|
None
|
|
Daniel S. Vandivort –1954
|
Trustee
|
2019
|
President, Flyway
Advisory Services LLC
(consulting and property
management) and
Member, Investment
Committee of Historic
Charleston Foundation
Formerly: President and
Chief Investment Officer,
previously Head of Fixed
Income, Weiss Peck and
Greer/Robeco Investment
Management; Trustee and
Chair, Weiss Peck and
Greer Funds Board; and
various capacities at CS
First Boston including
Head of Fixed Income at
First Boston Asset
Management
|
164
|
Formerly: Trustee and
Governance Chair,
Oppenheimer Funds;
Treasurer, Chairman of
the Audit and Finance
Committee, Huntington
Disease Foundation of
America.
|
Officers
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
Glenn Brightman – 1972
|
President and
Principal
Executive
Officer
|
2023
|
Chief Operating Officer, Americas, Invesco Ltd.; Senior Vice
President, Invesco Advisers, Inc.; President and Principal
Executive Officer, The Invesco Funds; and Manager, Invesco
Investment Advisers LLC
Formerly: Global Head of Finance, Invesco Ltd; Executive Vice
President and Chief Financial Officer, Nuveen
|
|
Melanie Ringold – 1975
|
Senior Vice
President, Chief
Legal Officer
and Secretary
|
2023
|
Head of Legal of the Americas, Invesco Ltd.; Senior Vice
President and Secretary, Invesco Advisers, Inc. (formerly known
as Invesco Institutional (N.A.), Inc.) (registered investment
adviser); Secretary, Invesco Distributors, Inc. (formerly known as
Invesco AIM Distributors, Inc.); Secretary, Invesco Investment
Services, Inc. (formerly known as Invesco AIM Investment
Services, Inc.); Senior Vice President, Chief Legal Officer and
Secretary, The Invesco Funds; Secretary, Invesco Investment
Advisers LLC and Invesco Capital Markets, Inc.; Chief Legal
Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-
Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust,
Invesco Actively Managed Exchange-Traded Fund Trust, Invesco
Actively Managed Exchange-Traded Commodity Fund Trust and
Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary and
Vice President, Harbourview Asset Management Corporation;
Secretary and Senior Vice President, OppenheimerFunds, Inc.
and Invesco Managed Accounts, LLC; Secretary and Senior Vice
|
C-7
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
President, Oppenheimer Acquisition Corp.; Secretary, SteelPath
Funds Remediation LLC; and Secretary and Senior Vice
President, Trinity Investment Management Corporation
Formerly: Secretary and Senior Vice President, OFI SteelPath,
Inc.; Assistant Secretary, Invesco Distributors, Inc., Invesco
Advisers, Inc., Invesco Investment Services, Inc., Invesco Capital
Markets, Inc., Invesco Capital Management LLC, and Invesco
Investment Advisers LLC; and Assistant Secretary and Assistant
Vice President, Invesco Funds
|
|
John M. Zerr – 1962
|
Senior Vice
President
|
2006
|
Chief Operating Officer of the Americas; Senior Vice President,
Invesco Advisers, Inc. (formerly known as Invesco Institutional
(N.A.), Inc.) (registered investment adviser); Senior Vice
President, Invesco Distributors, Inc. (formerly known as Invesco
AIM Distributors, Inc.); Director and Vice President, Invesco
Investment Services, Inc. (formerly known as Invesco AIM
Investment Services, Inc.); Senior Vice President, The Invesco
Funds; Managing Director, Invesco Capital Management LLC;
Senior Vice President, Invesco Capital Markets, Inc. (formerly
known as Van Kampen Funds Inc.); Manager, Invesco
Specialized Products, LLC; Member, Invesco Canada Funds
Advisory Board; Director, President and Chief Executive Officer,
Invesco Corporate Class Inc. (corporate mutual fund company);
Director, Chairman, President and Chief Executive Officer,
Invesco Canada Ltd. (formerly known as Invesco Trimark
Ltd./Invesco Trimark Ltèe) (registered investment adviser and
registered transfer agent); President, Invesco, Inc.; President,
Invesco Global Direct Real Estate Feeder GP Ltd.; President,
Invesco IP Holdings (Canada) Ltd; President, Invesco Global
Direct Real Estate GP Ltd.; and President, Invesco Financial
Services Ltd/Services Financiers Invesco Ltée
Formerly: Director and Chairman, Invesco Trust Company;
Manager, Invesco Indexing LLC; Director, Invesco Investment
Advisers LLC (formerly known as Van Kampen Asset
Management); President, Trimark Investments Ltd/Services
Financiers Invesco Ltee; Director and Senior Vice President,
Invesco Insurance Agency, Inc.; Director and Senior Vice
President, Invesco Management Group, Inc. (formerly known as
Invesco AIM Management Group, Inc.); Secretary and General
Counsel, Invesco Management Group, Inc. (formerly known as
Invesco AIM Management Group, Inc.); Secretary, Invesco
Investment Services, Inc. (formerly known as Invesco AIM
Investment Services, Inc.); Chief Legal Officer and Secretary, The
Invesco Funds; Secretary and General Counsel, Invesco
Investment Advisers LLC (formerly known as Van Kampen Asset
Management); Secretary and General Counsel, Invesco Capital
Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief
Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco
Exchange-Traded Fund Trust II, Invesco India Exchange-Traded
Fund Trust, Invesco Actively Managed Exchange-Traded Fund
Trust, Invesco Actively Managed Exchange-Traded Commodity
Fund Trust and Invesco Exchange-Traded Self-Indexed Fund
Trust; Secretary, Invesco Indexing LLC; Director, Secretary,
General Counsel and Senior Vice President, Van Kampen
Exchange Corp.; Director, Vice President and Secretary, IVZ
Distributors, Inc. (formerly known as INVESCO Distributors, Inc.);
Director and Vice President, INVESCO Funds Group, Inc.;
Director and Vice President, Van Kampen Advisors Inc.; Director,
Vice President, Secretary and General Counsel, Van Kampen
|
C-8
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
Investor Services Inc.; Director and Secretary, Invesco
Distributors, Inc. (formerly known as Invesco AIM Distributors,
Inc.); Director, Senior Vice President, General Counsel and
Secretary, Invesco AIM Advisers, Inc. and Van Kampen
Investments Inc.; Director, Vice President and Secretary, Fund
Management Company; Director, Senior Vice President,
Secretary, General Counsel and Vice President, Invesco AIM
Capital Management, Inc.; and Chief Operating Officer and
General Counsel, Liberty Ridge Capital, Inc. (an investment
adviser)
|
|
Tony Wong – 1973
|
Senior Vice
President
|
2023
|
Senior Managing Director, Invesco Ltd.; Director, Chairman, Chief
Executive Officer and President, Invesco Advisers, Inc.; Director
and Chairman, Invesco Private Capital, Inc., INVESCO Private
Capital Investments, Inc. and INVESCO Realty, Inc.; Director,
Invesco Senior Secured Management, Inc.; President, Invesco
Managed Accounts, LLC and SNW Asset Management
Corporation; and Senior Vice President, The Invesco Funds
Formerly: Assistant Vice President, The Invesco Funds; and Vice
President, Invesco Advisers, Inc.
|
|
Stephanie C. Butcher -
1971
|
Senior Vice
President
|
2023
|
Senior Managing Director, Invesco Ltd.; Senior Vice President,
The Invesco Funds; Director and Chief Executive Officer, Invesco
Asset Management Limited
|
|
Adrien Deberghes – 1967
|
Principal
Financial Officer,
Treasurer and
Senior Vice
President
|
2020
|
Head of the Fund Office of the CFO and Fund Administration;
Vice President, Invesco Advisers, Inc.; Director, Invesco Trust
Company; Principal Financial Officer, Treasurer and Senior Vice
President, The Invesco Funds; and Vice President, Invesco
Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund
Trust II, Invesco India Exchange-Traded Fund Trust, Invesco
Actively Managed Exchange-Traded Fund Trust, Invesco Actively
Managed Exchange-Traded Commodity Fund Trust and Invesco
Exchange-Traded Self-Indexed Fund Trust
Formerly: Vice President, The Invesco Funds; Senior Vice
President and Treasurer, Fidelity Investments
|
|
Crissie M. Wisdom – 1969
|
Anti-Money
Laundering
Compliance
Officer
|
2013
|
Anti-Money Laundering and OFAC Compliance Officer for Invesco
U.S. entities including: Invesco Advisers, Inc. and its affiliates,
Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco
Investment Services, Inc., The Invesco Funds, Invesco Capital
Management, LLC, Invesco Trust Company; and Fraud
Prevention Manager for Invesco Investment Services, Inc.
|
|
Todd F. Kuehl – 1969
|
Chief
Compliance
Officer and
Senior Vice
President
|
2020
|
Chief Compliance Officer, Invesco Advisers, Inc. (registered
investment adviser); and Chief Compliance Officer and Senior
Vice President, The Invesco Funds
Formerly: Managing Director and Chief Compliance Officer, Legg
Mason (Mutual Funds); Chief Compliance Officer, Legg Mason
Private Portfolio Group (registered investment adviser)
|
|
James Bordewick, Jr. –
1959
|
Senior Vice
President and
Senior Officer
|
2022
|
Senior Vice President and Senior Officer, The Invesco Funds
Formerly, Chief Legal Officer, KingsCrowd, Inc. (research and
analytical platform for investment in private capital markets); Chief
Operating Officer and Head of Legal and Regulatory, Netcapital
(private capital investment platform); Managing Director, General
Counsel of asset management and Chief Compliance Officer for
asset management and private banking, Bank of America
|
C-9
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
Corporation; Chief Legal Officer, Columbia Funds and BofA
Funds; Senior Vice President and Associate General Counsel,
MFS Investment Management; Chief Legal Officer, MFS Funds;
Associate, Ropes & Gray; Associate, Gaston Snow & Ely Bartlett.
|
C-10
Trustee Ownership of Fund Shares as of December 31, 2023
|
Name of Trustee
|
Dollar Range of Equity
Securities Per Fund
|
Aggregate Dollar Range
of Equity Securities in
All Registered Investment
Companies Overseen by
Trustee in Invesco Funds
|
|
Interested Person
|
|
|
|
Jeffrey H. Kupor2
|
None
|
Over $100,000
|
|
Douglas Sharp2
|
None
|
None
|
|
|
|
|
|
Independent Trustees
|
|
|
|
Beth A. Brown
|
Invesco Short Term Bond Fund (Over $100,000)
|
Over $100,0003
|
|
Carol Deckbar2
|
N/A
|
N/A
|
|
Cynthia Hostetler
|
None
|
Over $100,0003
|
|
Eli Jones
|
Invesco Corporate Bond Fund (Over $100,000)
|
Over $100,0003
|
|
Elizabeth Krentzman
|
Invesco U.S. Government Money Portfolio ($10,001 - $50,000)
|
Over $100,0003
|
|
Anthony J. LaCava, Jr.
|
None
|
Over $100,0003
|
|
James “Jim” Liddy2
|
N/A
|
N/A
|
|
Prema Mathai-Davis
|
None
|
Over $100,0003
|
|
Joel W. Motley
|
None
|
Over $100,0003
|
|
Teresa M. Ressel
|
Invesco Government Money Market Fund (Over $100,000)
|
Over $100,0003
|
|
Robert C. Troccoli
|
Invesco Government Money Market Fund (Over $100,000)
|
Over $100,0003
|
|
Daniel S. Vandivort
|
Invesco U.S. Government Money Portfolio ($50,001 -
$100,000)
|
Over $100,0003
|
|
|
Invesco Short Term Bond Fund (Over $100,000)
|
|
|
|
|
|
2.
The information in the table is provided as of December 31, 2023. Messrs. Kupor, Sharp
and Liddy and Ms. Deckbar were elected as trustees of the Trust effective January 16, 2024.
3.
Includes total amount of compensation deferred by the trustee at his or her election
pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested
in one or more of the Invesco Funds.
C-11
APPENDIX D - TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee
of the Trust who was not affiliated with Invesco during the year ended December 31, 2023, unless otherwise noted.
|
Trustee
|
Aggregate
Compensation
From the Trust(1)
|
Retirement
Benefits Accrued
by All Invesco
Funds
|
Estimated
Annual Benefits
Upon Retirement(2)
|
Total
Compensation
From All Invesco Funds Paid to
the Trustees(3)
|
|
Independent Trustees(4,5)
|
|
|
|
|
|
Beth Ann Brown
|
$32,748
|
-
|
-
|
$630,000
|
|
Carol W Deckbar
|
4,091
|
-
|
-
|
-
|
|
Cynthia Hostetler
|
23,877
|
-
|
-
|
465,000
|
|
Eli Jones
|
21,692
|
-
|
-
|
422,500
|
|
Elizabeth Krentzman
|
24,260
|
-
|
-
|
470,000
|
|
Anthony J. LaCava, Jr.
|
24,392
|
-
|
-
|
477,500
|
|
James Liddy
|
4,091
|
-
|
-
|
-
|
|
Prema Mathai-Davis
|
22,723
|
-
|
$205,000
|
442,500
|
|
Joel W. Motley
|
22,339
|
-
|
-
|
430,000
|
|
Teresa M. Ressel
|
22,587
|
-
|
-
|
440,000
|
|
Robert C. Troccoli
|
22,719
|
-
|
-
|
445,000
|
|
Daniel S. Vandivort
|
23,751
|
-
|
-
|
462,500
|
(1)
Amounts shown are based on the fiscal year ended February 29, 2024. The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended February 29, 2024, including earnings, was $51,737.80. On November 10, 2021, Russell Burk resigned from his role as Senior Vice President and Senior Officer
of the Invesco Funds. During the fiscal year ended October 31, 2023, aggregate compensation from the Trust for Mr. Burk was $69,204.
(2)
These amounts represent the estimated annual benefits payable by the Invesco Funds upon the trustees’ retirement and assumes each trustee serves until his or her normal retirement date. These amounts
are not adjusted to reflect deemed investment appreciation or depreciation.
(3)
These amounts represent the compensation paid from all Invesco Funds to the individuals
who serve as trustees. All trustees currently serve as trustee of 32 registered investment companies advised by Invesco,
unless otherwise noted.
(4)
On August 28, 2022, Mr. Christopher Wilson retired. During the fiscal year ended February
29, 2024, compensation from the Trust for Mr. Wilson for consultant services provided to the Trust subsequent to his retirement was $29,033.63. Pursuant to a consulting agreement with the Trust, Mr. Wilson may receive payments for consulting
services provided to the Trust for up to three years following his retirement.
(5)
Effective January 16, 2024, Ms. Carol Deckbar and Mr. James Liddy were elected as
trustees of the Trust.
D-1
APPENDIX E - PROXY POLICY AND PROCEDURES
The Adviser and each sub-adviser rely on this policy. In addition, Invesco Asset Management
(Japan) Limited and Invesco Asset Management (India) Pvt. Ltd. have also adopted operating
guidelines and procedures for proxy voting particular to each regional investment
center. Such guidelines and procedures are attached hereto.
Invesco’s Policy Statement on Global
Corporate Governance
and Proxy Voting
Corporate Governance
and Proxy Voting
Effective January 2024
Table of Contents
|
|
|
|
|
I.
|
Introduction
|
E -4
|
|
|
A. Our Approach to Proxy Voting
|
E -4
|
|
|
B. Applicability of Policy
|
E -4
|
|
|
|
|
|
II.
|
Global Proxy Voting Operational Procedures
|
E -5
|
|
|
A. Oversight and Governance
|
E -5
|
|
|
B. The Proxy Voting Process
|
E -5
|
|
|
C. Retention and Oversight of Proxy Service Providers
|
E -6
|
|
|
D. Disclosures and Recordkeeping
|
E -6
|
|
|
E. Market and Operational Limitations
|
E -7
|
|
|
F. Securities Lending
|
E -8
|
|
|
G. Conflicts of Interest
|
E -8
|
|
|
H. Review of Policy
|
E -9
|
|
|
|
|
|
III.
|
Our Good Governance Principles
|
E -10
|
|
|
A. Transparency
|
E -10
|
|
|
B. Accountability
|
E -11
|
|
|
C. Board Composition and Effectiveness
|
E -13
|
|
|
D. Long-Term Stewardship of Capital
|
E -14
|
|
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E. Environmental, Social and Governance Risk Oversight
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F. Executive Compensation and Alignment
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Exhibit A
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I.
Introduction
Invesco Ltd. and its wholly owned investment adviser subsidiaries (collectively, “Invesco”, the “Company”, “our” or “we”) have adopted and implemented this Policy Statement on Global Corporate Governance and
Proxy Voting (“Global Proxy Voting Policy” or “Policy”), which we believe describe policies and procedures reasonably designed to ensure proxy voting matters are conducted in the best interests of our clients.
A.
Our Approach to Proxy Voting
Invesco understands proxy voting is an integral aspect of the investment management services it provides to clients. As an investment adviser, Invesco has a fiduciary duty to act in the best interests of our clients. Where Invesco has been delegated the authority to vote proxies with respect to securities
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held in client portfolios, we exercise such authority in the manner we believe best serves the interests of our clients and their investment objectives. We recognize that proxy voting is an important tool that enables us to drive shareholder value.
A summary of our global operational procedures and governance structure is included
in Part II of this Policy. Invesco’s good governance principles, which are included in Part III of this Policy, and our internal proxy voting guidelines are both principles and rules-based and cover topics
that typically appear on voting ballots. Invesco’s portfolio management teams retain ultimate authority to vote proxies. Given the complexity of proxy issues across our clients’ holdings globally, our investment teams consider many factors when determining how to cast votes. We seek to evaluate and make voting decisions that favor proxy proposals and governance practices that, in our view, promote
long-term shareholder value.
B.
Applicability of Policy
Invesco’s portfolio management teams vote proxies on behalf of Invesco-sponsored funds and both fund and non-fund advisory clients that have explicitly granted Invesco authority in writing
to vote proxies on their behalf. In the case of institutional or sub-advised clients, Invesco will vote
the proxies in accordance with this Policy unless the client agreement specifies that the client
retains the right to vote or has designated a named fiduciary to direct voting.
This Policy is implemented by all entities listed in Exhibit A, except as noted below. Due to regional or asset class-specific considerations, certain entities may have local proxy voting guidelines or
policies and procedures that differ from this Policy. In the event local policies and this Policy differ, the local policy will apply. These entities subject to local policies are listed in Exhibit A and include: Invesco Asset Management (Japan) Limited, Invesco Asset Management (India) Pvt. Ltd, Invesco Taiwan
Ltd, Invesco Real Estate Management S.a.r.l and Invesco Capital Markets, Inc. for Invesco Unit Investment Trusts.
Where our passively managed strategies and certain other client accounts managed in accordance
with fixed income, money market and index strategies (including exchange-traded funds) (referred to as “passively managed accounts”) hold the same investments as our actively managed equity funds, voting decisions with respect to those accounts generally follow the voting decisions made
by the largest active holder of the equity shares. Invesco refers to this approach as “Majority Voting.” This process of Majority Voting seeks to ensure that our passively managed accounts benefit from the engagement
and deep dialogue of our active investment teams, which Invesco believes benefits shareholders in passively managed accounts. Invesco will generally apply the majority holder’s vote instruction to these passively managed accounts. Where securities are held only in passively managed accounts and not owned in our actively managed accounts, the proxy will be generally voted in line with this Policy and internal proxy voting guidelines. Notwithstanding the above, portfolio management teams of our passively managed accounts retain full discretion over proxy voting decisions and may determine
it appropriate to individually evaluate a specific proxy proposal or override Majority Voting and vote
the shares as they determine to be in the best interest of those accounts, absent certain types of conflicts of interest, which are discussed elsewhere in the Policy. To the extent our portfolio management teams believe a specific proxy proposal requires enhanced analysis or if it is not covered by the Policy or
internal guidelines, our portfolio management teams will evaluate such proposal and execute the voting decision.
II.
Global Proxy Voting Operational Procedures
Invesco’s global proxy voting operational procedures (the “Procedures”) are in place to implement the provisions of this Policy. Invesco aims to vote all proxies where we have been granted voting authority in accordance with this Policy, as implemented by the Procedures outlined in this Section II. It is the responsibility of Invesco’s Proxy Voting and Governance team to maintain and facilitate the review of the Procedures annually.
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A.
Oversight and Governance
Oversight of the proxy voting process is provided by the Proxy Voting and Governance
team and the Global Invesco Proxy Advisory Committee (“Global IPAC”). For some clients, third parties (e.g., U.S. fund boards) and internal sub-committees also provide oversight of the proxy voting
process.
Guided by its philosophy that investment teams should manage proxy voting, Invesco
has created the Global IPAC. The Global IPAC is an investments-driven committee comprised of representatives
from various investment management teams globally and Invesco’s Global Head of ESG and is chaired by its Director of Proxy Voting and Governance. Representatives from Invesco’s Legal and Compliance, Risk and Government Affairs departments may also participate in Global IPAC meetings. The
Global IPAC provides a forum for investment teams, in accordance with this Policy, to:
●
monitor, understand and discuss key proxy issues and voting trends within the Invesco
complex;
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assist Invesco in meeting regulatory obligations;
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review votes not aligned with our good governance principles; and
●
consider conflicts of interest in the proxy voting process.
In fulfilling its responsibilities, the Global IPAC meets as necessary, but no less
than semi-annually, and has the following responsibilities and functions: (i) acts as a key liaison between the Proxy Voting and Governance team and portfolio management teams to ensure compliance with this Policy; (ii) provides insight on market trends as it relates to stewardship practices; (iii) monitors proxy votes that present potential conflicts of interest; and (iv) reviews and provides input, at least annually,
on this Policy and related internal procedures and recommends any changes to the Policy based on, but
not limited to, Invesco’s experience, evolving industry practices, or developments in applicable laws or regulations. In addition, when necessary, the Global IPAC Conflict of Interest Sub-committee makes voting decisions
on proxies that require an override of the Policy due to an actual or perceived conflict
of interest; the Global IPAC reviews any such voting decisions.
B.
The Proxy Voting Process
At Invesco, investment teams execute voting decisions through our proprietary voting platform
and are supported by the Proxy Voting and Governance team and a dedicated technology team. Invesco’s proprietary voting platform streamlines the proxy voting process by providing our global investment teams with direct access to proxy meeting materials including ballots, Invesco’s internal proxy voting guidelines and recommendations, as well as proxy research and vote recommendations issued by Proxy Service Providers (as such term is defined below). Votes executed on Invesco’s proprietary voting platform are transmitted to our proxy voting agent electronically and are then delivered to the respective designee for tabulation.
Invesco’s Proxy Voting and Governance team monitors whether we have received proxy ballots
for shareholder meetings in which we are entitled to vote. This involves coordination among various parties in the proxy voting ecosystem, such as our proxy voting agent, custodians and ballot distributors. If necessary, we may choose to escalate a matter to facilitate our ability to exercise
our right to vote.
Our proprietary systems facilitate internal control and oversight of the voting process.
To facilitate the casting of votes in an efficient manner, Invesco may choose to pre-populate and leverage the capabilities of these proprietary systems to automatically submit votes based on its internal proxy voting guidelines and in circumstances where Majority Voting, share blocking (as defined below) or proportional voting applies. If necessary, votes may be cast by Invesco or via the Proxy Service Providers Web
platform at our direction.
C.
Retention and Oversight of Proxy Service Providers
Invesco has retained two independent third party proxy voting service providers to provide
proxy support globally: Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis (“GL”). In addition to ISS and
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GL, Invesco may retain certain local proxy service providers to access regionally specific research (collectively with ISS and GL, “Proxy Service Providers”). The services may include one or more of the following: providing a comprehensive analysis of each voting item and interpretations of each based on Invesco’s internally developed proxy voting guidelines; and providing assistance with the administration of the proxy process and certain proxy voting-related functions, including, but not limited to, operational, reporting and recordkeeping services.
While Invesco may take into consideration the information and recommendations provided
by the Proxy Service Providers, including based upon Invesco’s internal proxy voting guidelines and recommendations provided to such Proxy Service Providers, Invesco’s portfolio management teams retain full and independent discretion with respect to proxy voting decisions.
Updates to previously issued proxy research reports and recommendations may be provided to incorporate newly available information or additional disclosure provided by the issuer regarding a
matter to be voted on, or to correct factual errors that may result in the issuance of revised proxy vote recommendations. Invesco’s Proxy Voting and Governance team periodically monitors for these research alerts issued by Proxy Service Providers that are shared with our portfolio management teams.
Invesco performs extensive initial and ongoing due diligence on the Proxy Service
Providers it engages globally. Invesco conducts annual due diligence meetings as part of its ongoing oversight
of Proxy Service Providers. The topics included in these annual due diligence reviews include
material changes in service levels, leadership and control, conflicts of interest, methodologies for
formulating vote recommendations, operations, and research personnel, among other things. In addition,
Invesco monitors and communicates with these firms throughout the year and monitors their
compliance with Invesco’s performance and policy standards.
As part of our annual policy development process, Invesco may engage with other external
proxy and governance experts to understand market trends and developments. These meetings provide
Invesco with an opportunity to assess the Proxy Service Providers’ capabilities, conflicts of interest and service levels, as well as provide investment professionals with direct insight into the Proxy Service Providers’ stances on key corporate governance and proxy topics and their policy framework/methodologies.
Invesco completes a review of the System and Organizational Controls (“SOC”) Reports for Proxy Service Providers to confirm the related controls operated effectively to provide
reasonable assurance.
D.
Disclosures and Recordkeeping
Unless otherwise required by local or regional requirements, Invesco maintains voting
records for at least seven (7) years. Invesco makes its proxy voting records publicly available in compliance with regulatory requirements and industry best practices in the regions below:
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In accordance with the U.S. Securities and Exchange Commission regulations, Invesco will file a record of all proxy voting activity for the prior 12 months ending June 30th for each
U.S. registered fund. In addition, Invesco, as an institutional manager that is required to file Form 13F, will file a record of its votes on certain executive compensation (“say on pay”) matters. These fund proxy voting filings and institutional manager say on pay voting filings will
generally be made on or before August 31st of each year. Each year, the proxy voting records for each U.S. registered fund are made available on Invesco’s website here. Moreover, and to the extent applicable, the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including Department of Labor regulations and guidance thereunder, provide that the
named fiduciary generally should be able to review not only the investment adviser’s voting procedure with respect to plan-owned stock, but also to review the actions taken in individual
proxy voting situations. In the case of institutional and sub-advised clients, clients may contact their client service representative to request information about how Invesco voted proxies on their
behalf. Absent specific contractual guidelines, such requests may be made on a semi-annual
basis.
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In the UK and Europe, Invesco publicly discloses our proxy votes monthly in compliance
with the UK Stewardship Code and for the European Shareholder Rights Directive annually here.
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In Canada, Invesco publicly discloses our annual proxy votes each year here by August 31st, covering the 12-month period ending June 30th in compliance with the National Instrument
81-106 Investment Fund Continuous Disclosure.
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In Japan, Invesco publicly discloses our proxy votes annually in compliance with the
Japan Stewardship Code here.
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In India, Invesco publicly discloses our proxy votes quarterly here in compliance with The Securities and Exchange Board of India (“SEBI”) Circular on stewardship code for all Mutual Funds and all categories of Alternative Investment Funds in relation to their investment
in listed equities. SEBI has implemented principles on voting for Mutual Funds through circulars
dated March 15, 2010, March 24, 2014 and March 5, 2021, which prescribed detailed mandatory requirements for Mutual Funds in India to disclose their voting policies and actual
voting by Mutual Funds on different resolutions of investee companies.
●
In Hong Kong, Invesco Hong Kong Limited will provide proxy voting records upon request
in compliance with the Securities and Futures Commission (“SFC”) Principles of Responsible Ownership.
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In Taiwan, Invesco publicly discloses our proxy voting policy and proxy votes annually
in compliance with Taiwan’s Stewardship Principles for Institutional Investors here.
●
In Australia, Invesco publicly discloses a summary of its proxy voting record annually
here.
●
In Singapore, Invesco Asset Management Singapore Ltd. will provide proxy voting records
upon request in compliance with the Singapore Stewardship Principles for Responsible Investors.
Invesco may engage Proxy Service Providers to make available or maintain certain required proxy voting records in accordance with the above stated applicable regulations. Separately managed account clients that have authorized Invesco to vote proxies on their behalf will receive
proxy voting information with respect to those accounts upon request. Certain other clients may obtain information about how we voted proxies on their behalf by contacting their client service representative or advisor. Invesco does not publicly pre-disclose voting intentions in advance of shareholder meetings.
E.
Market and Operational Limitations
In the great majority of instances, Invesco will vote proxies. However, in certain
circumstances, Invesco may refrain from voting where the economic or other opportunity costs of voting exceed any benefit to clients. Moreover, ERISA fiduciaries, in voting proxies or exercising other shareholder
rights, must not subordinate the economic interests of plan participants and beneficiaries to unrelated
objectives. These matters are left to the discretion of the relevant portfolio manager. Such circumstances
could include, for example:
●
Certain countries impose temporary trading restrictions, a practice known as “share blocking.” This means that once the shares have been voted, the shareholder does not have the ability to sell the shares for a certain period of time, usually until the day after the conclusion
of the shareholder meeting. Invesco generally refrains from voting proxies at companies where share blocking applies. In some instances, Invesco may determine that the benefit to the client(s) of voting a specific proxy outweighs the client’s temporary inability to sell the shares.
●
Some companies require a representative to attend meetings in person to vote a proxy,
or submit additional documentation or the disclosure of beneficial owner details to vote. Invesco
may determine that the costs of sending a representative or submitting additional documentation or disclosures outweigh the benefit of voting a particular proxy.
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Invesco may not receive proxy materials from the relevant fund or client custodian
with sufficient time and information to make an informed independent voting decision.
●
Invesco held shares on the record date but has sold them prior to the meeting date.
In some non-U.S. jurisdictions, although Invesco uses reasonable efforts to vote a
proxy, proxies may not be accepted or may be rejected due to changes in the agenda for a shareholder
meeting for which Invesco does not have sufficient notice, due to a proxy voting service not being offered
by the custodian in the local market or due to operational issues experienced by third parties involved
in the process or by the issuer or sub-custodian. In addition, despite the best efforts of Invesco and
its proxy voting agent, there may be instances where our votes may not be received or properly tabulated by
an issuer or the issuer’s agent. Invesco will generally endeavor to vote and maintain any paper ballots received provided
they are delivered in a timely manner ahead of the vote deadline.
F.
Securities Lending
Invesco’s funds may participate in a securities lending program. In circumstances where funds’ shares are on loan, the voting rights of those shares are transferred to the borrower. If
the security in question is on loan as part of a securities lending program, Invesco may determine that the
vote is material to the investment and therefore, the benefit to the client of voting a particular proxy outweighs the economic benefits of securities lending. In those instances, Invesco may determine to recall
securities that are on loan prior to the meeting record date, so that we will be entitled to vote those shares.
For example, for certain actively managed funds, the lending agent has standing instructions to systematically
recall all securities on loan for Invesco to vote the proxies on those previously loaned shares. There may be instances where Invesco may be unable to recall shares or may choose not to recall
shares. Such circumstances may include instances when Invesco does not receive timely notice of
the meeting, or when Invesco deems the opportunity for a fund to generate securities lending revenue
to outweigh the benefits of voting at a specific meeting. The relevant portfolio manager will make these determinations.
G.
Conflicts of Interest
There may be occasions where voting proxies may present a perceived or actual conflict
of interest between Invesco, as investment adviser, and one or more of Invesco’s clients or vendors.
Firm-Level Conflicts of Interest
A conflict of interest may exist if Invesco has a material business relationship with
either the company soliciting a proxy or a third party that has a material interest in the outcome of
a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Such relationships may
include, among others, a client relationship, serving as a vendor whose products / services are material
or significant to Invesco, serving as a distributor of Invesco’s products, or serving as a significant research provider or broker to Invesco.
Invesco identifies potential conflicts of interest based on a variety of factors,
including but not limited to the materiality of the relationship between the issuer or its affiliates to Invesco.
Material firm-level conflicts of interests are identified by individuals and groups
within Invesco globally based on criteria established by the Proxy Voting and Governance team. These criteria are monitored and updated periodically by the Proxy Voting and Governance team so up-to-date information is available when conducting conflicts checks. Operating procedures and associated governance
are designed to seek to ensure conflicts of interest are appropriately considered ahead
of voting proxies. The Global IPAC Conflict of Interest Sub-committee maintains oversight of the process.
Companies identified as conflicted will be voted in line with the principles below as implemented by Invesco’s internal proxy voting guidelines. To the extent a portfolio manager disagrees with the Policy, our
processes and procedures seek to ensure that justifications and rationales are fully documented and presented to the Global IPAC Conflict of Interest Sub-committee for approval by a
majority vote.
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As an additional safeguard, persons from Invesco’s marketing, distribution and other customer-facing functions may not serve on the Global IPAC. For the avoidance of doubt, Invesco may
not consider Invesco Ltd.’s pecuniary interest when voting proxies on behalf of clients. To avoid any appearance of a conflict of interest, Invesco will not vote proxies issued by Invesco Ltd. that are held in client accounts.
Personal Conflicts of Interest
A conflict also may exist where an Invesco employee has a known personal or business
relationship with other proponents of proxy proposals, participants in proxy contests, corporate
directors, or candidates for directorships. Under Invesco’s Global Code of Conduct, Invesco entities and individuals must act in the best interests of clients and must avoid any situation that gives
rise to an actual or perceived conflict of interest.
All Invesco personnel with proxy voting responsibilities are required to report any
known personal or business conflicts of interest regarding proxy issues with which they are involved.
In such instances, the individual(s) with the conflict will be excluded from the decision-making process
relating to such issues.
Voting Funds of Funds
There may be conflicts that arise from Invesco voting on matters when shares of Invesco-sponsored
funds are held by other Invesco funds or entities. The scenarios below set out examples of how Invesco votes in these instances:
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When required by law or regulation, shares of an Invesco fund held by other Invesco
funds will be voted in the same proportion as the votes of external shareholders of the underlying
fund. If such proportional voting is not operationally possible, Invesco will not vote the
shares.
●
When required by law or regulation, shares of an unaffiliated registered fund held
by one or more Invesco funds will be voted in the same proportion as the votes of external shareholders
of the underlying fund. If such proportional voting is not operationally possible, Invesco
will not vote the shares.
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For U.S. funds of funds where proportional voting is not required by law or regulation, shares of
Invesco funds will be voted in the same proportion as the votes of external shareholders
of the underlying fund. If such proportional voting is not operationally possible, Invesco
will vote in line with our internally developed voting guidelines.
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Non-U.S. funds of funds will not be voted proportionally. The applicable Invesco entity will vote in line with its local policies, as indicated in Exhibit A. If no local policies exist, Invesco will vote non-U.S. funds of funds in line with the firm level conflicts of interest process described
above.
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Where client accounts are invested directly in shares issued by Invesco affiliates
and Invesco has proxy voting authority, shares will be voted proportionally in line with non-affiliated holders. If proportional voting is not possible, the shares will be voted in line with a Proxy Service Provider’s recommendation.
H.
Review of Policy
It is the responsibility of the Global IPAC to review this Policy and the internal proxy voting guidelines annually to consider whether any changes are warranted. This annual review seeks to ensure this Policy and the internal proxy voting guidelines remain consistent with clients’ best interests, regulatory requirements, local market standards and best practices. Further, this Policy and our internal proxy voting guidelines are reviewed at least annually by various departments within Invesco to seek to ensure that they remain consistent with Invesco’s views on best practice in corporate governance and long-term investment stewardship.
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III.
Our Good Governance Principles
Invesco’s good governance principles outline our views on best practice in corporate governance and long-term investment stewardship. These principles have been developed by our global investment
teams in collaboration with the Proxy Voting and Governance team and various departments internally. The broad philosophy and guiding principles in this section inform our approach to long-term
investment stewardship and proxy voting. The principles and positions reflected in this Policy are designed to guide Invesco’s investment professionals in voting proxies; they are not intended to be exhaustive
or prescriptive.
Our portfolio management teams retain full discretion on vote execution in the context of our good governance principles and internal proxy voting guidelines, except where otherwise specified in this Policy. The final voting decisions may consider the unique circumstances affecting companies,
regional best practices and any dialogue we have had with company management. As a result, different
portfolio management teams may vote differently on particular proxy votes for the same company. To the extent portfolio management teams choose to vote a proxy in a way that is not aligned with the principles below, such manager’s rationales are fully documented.
When evaluating proxy issues and determining how to cast our votes, Invesco’s portfolio management teams may engage with companies in advance of shareholder meetings, and throughout
the year. These meetings can be joint efforts between our global investment professionals.
The following guiding principles apply to proxy voting with respect to operating companies. We apply a separate approach to open-end and closed-end investment companies and unit investment
trusts. Where appropriate, these guidelines may be supplemented by additional internal guidance that considers regional variations in best practices, company disclosure and region-specific voting items. Invesco may vote on proposals not specifically addressed by these principles based on an evaluation of a proposal’s likelihood to enhance long-term shareholder value.
Our good governance principles are divided into six key themes that Invesco endorses:
A.
Transparency
We expect companies to provide accurate, timely and complete information that enables
investors to make informed investment decisions and effectively carry out their stewardship activities.
Invesco supports the highest standards in corporate transparency and believes that these disclosures
should be made available ahead of the voting deadlines for the Annual General Meeting or Extraordinary
General Meeting to allow for timely review and decision-making.
Financial reporting: Company accounts and reporting must accurately reflect the underlying economic position of a company. Arrangements that may constitute an actual or perceived conflict
with this objective should be avoided.
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We will generally support proposals to accept the annual financial statements, statutory
accounts and similar proposals unless these reports are not presented in a timely manner or
significant issues are identified regarding the integrity of these disclosures.
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We will generally vote against the incumbent audit committee chair, or nearest equivalent,
where the non-audit fees paid to the independent auditor exceed audit fees for two consecutive
years or other problematic accounting practices are identified such as fraud, misapplication
of audit standards or persistent material weaknesses/deficiencies in internal controls over
financial reporting.
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We will generally not support the ratification of the independent auditor and/or ratification
of their fees payable if non-audit fees exceed audit and audit related fees or if there are significant auditing controversies or questions regarding the independence of the external auditor.
We will consider an auditor’s length of service as a company’s independent auditor in applying this policy.
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B.
Accountability
Robust shareholder rights and strong board oversight help ensure that management adhere
to the highest standards of ethical conduct, are held to account for poor performance and
responsibly deliver value creation for stakeholders over the long-term. We therefore encourage companies
to adopt governance features that ensure board and management accountability. In particular,
we consider the following as key mechanisms for enhancing accountability to investors:
One share one vote: Voting rights are an important tool for investors to hold boards and management teams accountable. Unequal voting rights may limit the ability of investors to exercise
their stewardship obligations.
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We generally do not support proposals that establish or perpetuate dual classes of
voting shares, double voting rights or other means of differentiated voting or disproportionate
board nomination rights.
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We generally support proposals to decommission differentiated voting rights.
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Where unequal voting rights are established, we expect these to be accompanied by
reasonable safeguards to protect minority shareholders’ interests.
Anti-takeover devices: Mechanisms designed to prevent or unduly delay takeover attempts may unduly limit the accountability of boards and management teams to shareholders.
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We generally will not support proposals to adopt antitakeover devices such as poison
pills. Exceptions may be warranted at entities without significant operations and to preserve
the value of net operating losses carried forward or where the applicability of the pill is
limited in scope and duration.
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In addition, we will generally not support capital authorizations or amendments to
corporate articles or bylaws at operating companies that may be utilized for antitakeover purposes,
for example, the authorization of classes of shares of preferred stock with unspecified
voting, dividend, conversion or other rights (“blank check” authorizations).
Shareholder rights: We support the rights of shareholders to hold boards and management teams accountable for company performance. We generally support best practice aligned proposals
to enhance shareholder rights, including but not limited to the following:
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Adoption of proxy access rights
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Rights to call special meetings
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Rights to act by written consent
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Reduce supermajority vote requirements
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Remove antitakeover provisions
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Requirement that directors are elected by a majority vote
In addition, we oppose practices that limit shareholders’ ability to express their views at a general meeting such as bundling unrelated proposals or several significant article or bylaw
amendments into a single voting item. We will generally vote against these proposals unless we are satisfied
that all the underlying components are aligned with our views on best practice. We may make exceptions to this policy for non-operating companies (e.g., open-end and closed-end investment companies).
Director Indemnification: Invesco recognizes that individuals may be reluctant to serve as corporate directors if they are personally liable for all related lawsuits and legal costs.
As a result, reasonable limitations on directors’ liability can benefit a company and its shareholders by helping to attract and retain qualified directors while preserving recourse for shareholders in the event
of misconduct by directors. Accordingly, unless there is insufficient information to make a decision
about the nature of the
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proposal, Invesco will generally support proposals to limit directors’ liability and provide indemnification and/or exculpation, provided that the arrangements are reasonably limited in scope
to directors acting in good faith and, in relation to criminal matters, limited in scope to directors having
reasonable grounds for believing the conduct was lawful.
Responsiveness: Boards should respond to investor concerns in a timely fashion, including reasonable
requests to engage with company representatives regarding such concerns, and address
matters that receive significant voting dissent at general meetings of shareholders.
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We will generally vote against the incumbent chair of the governance committee, or nearest equivalent, in cases where the board has not adequately responded to items receiving
significant voting opposition from shareholders at an annual or extraordinary general meeting.
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We will generally vote against the incumbent chair of the governance committee, or nearest equivalent, where the board has not adequately responded to a shareholder proposal
which has received significant support from shareholders.
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We will generally vote against the incumbent chair of the compensation committee, or nearest equivalent, if there are significant ongoing concerns with a company’s compensation practices that have not been addressed by the committee or egregious concerns with the company’s compensation practices for two years consecutively.
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We will generally vote against the incumbent compensation committee chair, or nearest equivalent, where there are ongoing concerns with a company’s compensation practices and there is no opportunity to express dissatisfaction by voting against an advisory vote
on executive compensation, remuneration report (or policy) or nearest equivalent.
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Where a company has not adequately responded to engagement requests from Invesco or
satisfactorily addressed issues of concern, we may oppose director nominations, including,
but not limited to, nominations for the lead independent director and/or committee chairs.
Virtual shareholder meetings: Companies should hold their annual or special shareholder meetings in a manner that best serves the needs of its shareholders and the company. Shareholders
should have an opportunity to participate in such meetings. Shareholder meetings provide an important
mechanism by which shareholders provide feedback or raise concerns without undue censorship
and hear from the board and management.
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We will generally support management proposals seeking to allow for the convening
of hybrid shareholder meetings (allowing shareholders the option to attend and participate either
in person or through a virtual platform).
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Management or shareholder proposals that seek to authorize the company to hold virtual-only
meetings (held entirely through virtual platform with no corresponding in-person physical
meeting) will be assessed on a case-by-case basis. Companies have a responsibility
to provide strong justification and establish safeguards to preserve comparable rights and opportunities
for shareholders to participate virtually as they would have during an in-person meeting.
Invesco will consider, among other things, a company’s practices, jurisdiction and disclosure, including the items set forth below:
i.
meeting procedures and requirements are disclosed in advance of a meeting detailing
the rationale for eliminating the in-person meeting;
ii.
clear and comprehensive description of which shareholders are qualified to participate,
how shareholders can join the virtual-only meeting, how and when shareholders submit and
ask questions either in advance of or during the meeting;
iii.
disclosure regarding procedures for questions received during the meeting, but not
answered due to time or other restrictions; and
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iv.
description of how shareholder rights will be protected in a virtual-only meeting
format including the ability to vote shares during the time the polls are open.
C.
Board Composition and Effectiveness
Director election process: Board members should generally stand for election annually and individually.
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We will generally support proposals requesting that directors stand for election annually.
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We will generally vote against the incumbent governance committee chair or nearest equivalent, if a company has a classified board structure that is not being phased out. We may
make exceptions to this policy for non-operating companies (e.g., open-end and closed-end
investment companies) or in regions where market practice is for directors to stand for election on a
staggered basis.
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When a board is presented for election as a slate (e.g., shareholders are unable to
vote against individual nominees and must vote for or against the entire nominated slate of directors)
and this approach is not aligned with local market practice, we will generally vote against
the slate in cases where we otherwise would vote against an individual nominee.
●
Where market practice is to elect directors as a slate we will generally support the
nominated slate unless there are governance concerns with several of the individuals included
on the slate or we have broad concerns with the composition of the board such as a lack independence.
Board size: We will generally defer to the board with respect to determining the optimal number
of board members given the size of the company and complexity of the business, provided
that the proposed board size is sufficiently large to represent shareholder interests and sufficiently
limited to remain effective.
Board assessment and succession planning: When evaluating board effectiveness, Invesco considers whether periodic performance reviews and skills assessments are conducted
to ensure the board represents the interests of shareholders. In addition, boards should have a
robust succession plan in place for key management and board personnel.
Definition of independence: Invesco considers local market definitions of director independence but applies a proprietary standard for assessing director independence considering a director’s status as a current or former employee of the business, any commercial or consulting relationships
with the company, the level of shares beneficially owned or represented and familial relationships,
among others.
Board and committee independence: The board of directors, board committees and regional equivalents should be sufficiently independent from management, substantial shareholders
and conflicts of interest. We consider local market practices in this regard and in general we look
for a balance across the board of directors. Above all, we like to see signs of robust challenge
and discussion in the boardroom.
●
We will generally vote against one or more non-independent directors when a board
is less than majority independent, but we will take into account local market practice with regards
to board independence in limited circumstances where this standard is not appropriate.
●
We will generally vote against non-independent directors serving on the audit committee.
●
We will generally vote against non-independent directors serving on the compensation
committee.
●
We will generally vote against non-independent directors serving on the nominating
committee.
●
In relation to the board, compensation committee and nominating committee we will
consider the appropriateness of significant shareholder representation in applying this policy.
This exception will generally not apply to the audit committee.
E-11
Separation of Chair and CEO roles: We believe that independent board leadership generally enhances management accountability to investors. Companies deviating from this best
practice should provide a strong justification and establish safeguards to ensure that there is independent
oversight of a board’s activities (e.g., by appointing a lead or senior independent director with clearly defined powers and responsibilities).
●
We will generally vote against the incumbent nominating committee chair, or nearest equivalent, where the board chair is not independent unless a lead independent or senior director
is appointed.
●
We will generally support shareholder proposals requesting that the board chair be
an independent director.
●
We will generally not vote against a CEO or executive serving as board chair solely
on the basis of this issue, however, we may do so in instances where we have significant concerns
regarding a company’s corporate governance, capital allocation decisions and/or compensation practices.
Attendance and over boarding: Director attendance at board and committee meetings is a fundamental part of their responsibilities and provides efficient oversight for the
company and its investors. In addition, directors should not have excessive external board or managerial
commitments that may interfere with their ability to execute the duties of a director.
●
We will generally vote against or withhold votes from directors who attend less than 75% of board and committee meetings for two consecutive years. We expect companies to disclose any extenuating circumstances, such as health matters or family emergencies, that would justify a director’s low attendance, in line with good practices.
●
We will generally vote against directors who have more than four total mandates at
public operating companies. We apply a lower threshold for directors with significant commitments
such as executive positions and chairmanships.
Diversity: We believe an effective board should be comprised of directors with a mix of skills, experience, tenure, and industry expertise together with a diverse profile of individuals of different
genders, ethnicities, race, culture, age, perspectives and backgrounds. The board should reflect the diversity of the workforce, customers, and the communities in which the business operates.
In our view, greater diversity in the boardroom contributes to robust challenge and debate, avoids groupthink, fosters innovation, and provides competitive advantage to companies. We consider diversity at the board level, within the executive management team and in the succession pipeline.
●
In markets where there are regulatory expectations, listing standards or minimum quotas
for board diversity, Invesco will generally apply the same expectations. In all other markets, we will generally vote against the incumbent nominating committee chair of a board, or nearest equivalent, where a company failed to demonstrate improvements are being made to diversity practices for three or more consecutive years, recognizing that building a qualified and diverse board takes time. We may make exceptions to this policy for non-operating companies (e.g., open-end and closed-end investment companies).
●
We generally believe that an individual board’s nominating committee is best positioned to determine whether director term limits would be an appropriate measure to help achieve
these goals and, if so, the nature of such limits. Invesco generally opposes proposals to
limit the tenure of outside directors through mandatory retirement ages.
D.
Long-Term Stewardship of Capital
Capital allocation: Invesco expects companies to responsibly raise and deploy capital toward the long-term, sustainable success of the business. In addition, we expect capital allocation authorizations
and decisions to be made with due regard to shareholder dilution, rights of shareholders
to ratify significant corporate actions and pre-emptive rights, where applicable.
E-12
Share issuance and repurchase authorizations: We generally support authorizations to issue shares up to 20% of a company’s issued share capital for general corporate purposes. Shares should not be issued at a substantial discount to the market price or be repurchased at a substantial
premium to the market price.
Stock splits: We generally support management proposals to implement a forward or reverse stock
split, provided that a reverse stock split is not being used to take a company private.
In addition, we will generally support requests to increase a company’s common stock authorization if requested to facilitate a stock split.
Increases in authorized share capital: We will generally support proposals to increase a company’s number of authorized common and/or preferred shares, provided we have not identified
concerns regarding a company’s historical share issuance activity or the potential to use these authorizations for antitakeover purposes. We will consider the amount of the request in relation to the company’s current authorized share capital, any proposed corporate transactions contingent on approval
of these requests and the cumulative impact on a company’s authorized share capital, for example, if a reverse stock split is concurrently submitted for shareholder consideration.
Mergers, acquisitions, proxy contests, disposals and other corporate transactions: Invesco’s investment teams will review proposed corporate transactions including mergers, acquisitions,
reorganizations, proxy contests, private placements, dissolutions and divestitures based on a proposal’s individual investment merits. In addition, we broadly approach voting on other corporate
transactions as follows:
●
We will generally support proposals to approve different types of restructurings that
provide the necessary financing to save the company from involuntary bankruptcy.
●
We will generally support proposals to enact corporate name changes and other proposals
related to corporate transactions that we believe are in shareholders’ best interests.
●
We will generally support reincorporation proposals, provided that management have
provided a compelling rationale for the change in legal jurisdiction and provided further that
the proposal will not significantly adversely impact shareholders’ rights.
●
With respect to contested director elections, we consider the following factors, among
others, when evaluating the merits of each list of nominees: the long-term performance of
the company relative to its industry, management’s track record, any relevant background information related to the contest, the qualifications of the respective lists of director nominees, the
strategic merits of the approaches proposed by both sides, including the likelihood that the proposed
goals can be met, and positions of stock ownership in the company.
E.
Environmental, Social and Governance Risk Oversight
Director responsibility for risk oversight: The board of directors are ultimately responsible for overseeing management and ensuring that proper governance, oversight and control mechanisms
are in place at the companies they oversee. Invesco may take voting action against director
nominees in response to material governance or risk oversight failures that adversely affect shareholder
value.
Invesco considers the adequacy of a company's response to material oversight failures
when determining whether any voting action is warranted. In addition, Invesco will consider
the responsibilities delegated to board sub-committees when determining if it is appropriate to hold the incumbent chair of the relevant committee, or nearest equivalent, accountable for these material failures.
Material governance or risk oversight failures at a company may include, without limitation:
i.
significant bribery, corruption or ethics violations;
ii.
events causing significant climate-related risks;
E-13
iii.
significant health and safety incidents; or
iv.
failure to ensure the protection of human rights.
Reporting of financially material ESG information: Companies should report on their environmental, social and governance opportunities and risks where material to their business operations.
●
Climate risk management: We encourage companies to report on material climate-related
risks and opportunities and how these are considered within the company’s strategy, financial planning, governance structures and risk management frameworks aligned with applicable regional regulatory requirements. For companies in industries that materially contribute to climate change, we encourage comprehensive disclosure of greenhouse gas emissions and Paris-aligned emissions reduction targets, where appropriate. Invesco may take voting action
at companies that fail to adequately address climate-related risks, including opposing
director nominations in cases where we view the lack of effective climate transition risk management
as potentially detrimental to long-term shareholder value.
Shareholder proposals addressing environmental and social issues: We recognize environmental and social (E&S) shareholder proposals are nuanced and therefore, Invesco will analyze
such proposals on a case-by-case basis.
Invesco may support shareholder resolutions requesting that specific actions be taken
to address E&S issues or mitigate exposure to material E&S risks, including reputational risk, related
to these issues. When considering such proposals, we will consider the following but not limited to: a company's track record on E&S issues, the efficacy of the proposal's request, whether the requested
action is unduly burdensome, and whether we consider the adoption of such a proposal would promote
long-term shareholder value. We will also consider company responsiveness to the proposal and
any engagement on the issue when casting votes.
We generally do not support resolutions where insufficient information has been provided
in advance of the vote or a lack of disclosure inhibits our ability to make fully informed voting
decisions.
Ratification of board and/or management acts: We will generally support proposals to ratify the actions of the board of directors, supervisory board and/or executive decision-making
bodies, provided there are no material oversight failures as described above. When such oversight concerns
are identified, we will consider a company’s response to any issues raised and may vote against ratification proposals instead of, or in addition to, director nominees.
F.
Executive Compensation and Alignment
Invesco supports compensation polices and equity incentive plans that promote alignment
between management incentives and shareholders’ long-term interests. We pay close attention to local market practice and may apply stricter or modified criteria where appropriate.
Advisory votes on executive compensation, remuneration policy and remuneration reports: We will generally not support compensation-related proposals where more than one of the
following is present:
i.
there is an unmitigated misalignment between executive pay and company performance
for at least two consecutive years;
ii.
there are problematic compensation practices which may include, among others, incentivizing excessive risk taking or circumventing alignment between management and shareholders’ interests via repricing of underwater options;
iii.
vesting periods for long-term incentive awards are less than three years;
iv.
the company “front loads” equity awards;
v.
there are inadequate risk mitigating features in the program such as clawback provisions;
E-14
vi.
excessive, discretionary one-time equity grants are awarded to executives;
vii.
less than half of variable pay is linked to performance targets, except where prohibited
by law.
Invesco will consider company reporting on pay ratios as part of our evaluation of
compensation proposals, where relevant.
Equity plans: Invesco generally supports equity compensation plans that promote the proper alignment
of incentives with shareholders’ long-term interests, and generally votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features
which may include provisions to reprice options without shareholder approval, plans that include evergreen
provisions or plans that provide for automatic accelerated vesting upon a change in control.
Employee stock purchase plans: We generally support employee stock purchase plans that are reasonably designed to provide proper incentives to a broad base of employees, provided
that the price at which employees may acquire stock represents a reasonable discount from the market
price.
Severance Arrangements: Invesco considers proposed severance arrangements (sometimes known as “golden parachute” arrangements) on a case-by-case basis due to the wide variety among their terms. Invesco acknowledges that in some cases such arrangements, if reasonable, may be in shareholders’ best interests as a method of attracting and retaining high-quality executive talent.
We generally vote in favor of proposals requiring shareholder ratification of senior executives’ severance agreements where the proposed terms and disclosure align with good market practice.
E-15
Exhibit A
Harbourview Asset Management Corporation
Invesco Advisers, Inc.
Invesco Asset Management (India) Pvt. Ltd*1
Invesco Asset Management (Japan) Limited*1
Invesco Asset Management (Schweiz) AG
Invesco Asset Management Deutschland GmbH
Invesco Asset Management Limited1
Invesco Asset Management Singapore Ltd
Invesco Australia Ltd
Invesco European RR L.P.
Invesco Canada Ltd.1
Invesco Capital Management LLC
Invesco Capital Markets, Inc.*1
Invesco Fund Managers Limited
Invesco Hong Kong Limited
Invesco Investment Advisers LLC
Invesco Investment Management (Shanghai) Limited
Invesco Investment Management Limited
Invesco Loan Manager, LLC
Invesco Managed Accounts, LLC
Invesco Management S.A.
Invesco Overseas Investment Fund Management (Shanghai) Limited
Invesco Pensions Limited
Invesco Private Capital, Inc.
Invesco Real Estate Management S.a.r.l1
Invesco RR Fund L.P.
Invesco Senior Secured Management, Inc.
Invesco Taiwan Ltd*1
Invesco Trust Company
Oppenheimer Funds, Inc.
WL Ross & Co. LLC
* Invesco entities with specific proxy voting guidelines
1 Invesco entities with specific conflicts of interest policies
E-16
Invesco Japan Proxy Voting Guideline
Invesco Japan (hereinafter “we” or “our) votes proxies to maximize the interests of our clients (investors) and beneficiaries in the long term, acknowledging the importance of corporate governance
based on fiduciary duties to our clients (investors) and beneficiaries. We do not vote proxies
for the interests of ourselves and any third party other than clients (investors) and beneficiaries. The
interests of clients (investors) and beneficiaries are to expand the corporate value or the shareholders’ economic interests or prevent damage thereto. Proxy voting is an integral part of our stewardship activities,
and we make voting decisions considering whether the proposal would contribute to corporate value expansion
and sustainable growth.
To vote proxies adequately, we have established the Responsible Investment Committee
and developed the Proxy Voting Guideline to govern the decision-making process of proxy voting. While
we may seek advice from an external service provider based on our own guidelines, our investment professionals
make voting decisions in principle, based on the proxy voting guideline, taking into account whether
they contribute to increasing the subject company’s shareholder value.
Responsible proxy voting and constructive dialogue with investee companies are important
components of stewardship activities. While the Proxy Voting Guideline are principles for our voting
decisions, depending on the proposals, we may make an exception if we conclude that such a decision is
in the best interests of clients (investors) and beneficiaries after having constructive dialogue with the
investee companies. In such a case, approval of the Responsible Investment Committee shall be obtained.
The Responsible Investment Committee consists of members including Chief Investment
Officer, as the chair, Head of Compliance, Head of ESG, investment professionals nominated by the
chair and the other members, including persons in charge at the Client Reporting department.
We have established the Conflict of Interest Management Policy. In the situation that
may give rise to a conflict of interest, we aim to control it in the best interests of clients (investors)
and beneficiaries. The Compliance department is responsible for governing company-wide control of a conflict
of interest. The Compliance department is independent of Investment and Sales departments and shall
not receive any command or order for the matters compliant with the laws and regulations, including
a conflict of interest, from them.
Proxy Voting Guidelines
1. Appropriations of Retained Earnings and Dividends
We decide how to vote on proposals seeking approval for appropriations of retained
earnings and dividends, taking into account the subject company’s financial conditions and business performance, shareholders’ economic interests and so on.
●
Taking into account the company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly low, we
consider voting against the proposals unless reasonable explanations are given by the company.
●
With respect to the company where the Board of Directors determines appropriations
of retained earnings, taking into account the subject company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly
low, we consider voting against the reappointment of board directors unless reasonable explanations
are given by the company.
●
Taking into account the subject company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly low,
we consider voting for shareholder proposals increasing shareholder returns.
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2. Appointment of Board Directors
We decide how to vote on proposals concerning the appointment of board directors,
taking into account their independence, competence, anti-social activity records (if any), and so on.
Furthermore, we decide how to vote on the reappointment of board directors, taking into account their corporate
governance practices, accountability during their tenures, the company’s business performance and anti-social records (if any), and so on in addition to the above factors.
Board directors should make best efforts to continuously gain knowledge and skills
to fulfill the critical role and responsibilities in the company’s governance. A company should also provide sufficient training opportunities.
Independent outside directors are expected to play a significant role, such as safeguarding
minority shareholders’ interests through action based on their insights to increase the company’s corporate value. It is desirable to enhance the board’s governance function with independent outside directors accounting for the board majority. However, given the challenge to secure competent candidates, we
also recognize that it is difficult for all the companies, irrespective of their size, to deploy the independent outside directors’ majority on the Board.
Sufficient disclosure is a prerequisite for reflecting the assessment of independence
and suitability of director candidates and board composition in voting decisions. Currently, there are
cases where sufficient information cannot be obtained due to insufficient disclosure on a board chair, each committee’s function and committee chairs in Notice of Annual General Meeting (AGM) and a corporate governance
report, as well as untimeliness of these issuances. We generally make decisions based on Notice
of AGM, a corporate governance report and an annual securities report disclosed by the time of voting.
However, this shall not apply if we obtain such information from direct engagement with the company or find
relevant disclosure elsewhere.
(1)
Independence
We generally vote for the appointment of outside directors. However, we generally
vote against if a candidate is not regarded as independent of the subject company. It is desirable that
the company discloses information, such as numerical data, which supports our decision on board independence.
●
We view the following outside director candidates are not independent enough.
●
Candidates who have been working for the following companies for the last ten years
or are those people’s relatives.
●
The subject company
●
Its subsidiary
●
Its parent company
●
Candidates who have been working for the following companies for the last five years
or are those people’s relatives.
●
Shareholders who own more than 10% of the subject company
●
Principal loan lenders
●
Principal securities brokers
●
Major business partners
●
Auditors
●
Audit companies, consulting companies or any related service providers which have
any consulting contracts with the subject company
●
Any other counterparts which have any interests in the subject company
E-19
In cases other than above, we separately scrutinize the independence of candidates
who are regarded as not independent enough.
●
We take extra care when we assess the independence of candidates from a company which
is regarded as a policy shareholder under cross shareholding, mutually sends outside directors
to each other, and so on, as such cases potentially raise doubts about their independence. The company should
give reasonable explanations. It is also desirable that the company contrives the timing
and method of disclosure to allow investors to understand those relationships enough.
●
We judge board independence according to the stock exchange’s independence criteria with emphasizing independence ensured practically. We consider each company’s business environment and make the best effort to engage with the subject company to determine the independence
of the candidates.
●
We regard an outside director with a significantly long tenure as non-independent
and consider voting against the reappointment of such an outside director. We generally consider voting
against the reappointment of outside directors whose tenures are longer than ten years.
●
If the subject company is a company with Audit Committee, we judge the independence
of outside director candidates who become audit committee board members using the same independence
criteria for the appointment of statutory auditors in principle.
●
We generally consider voting against the appointment of top executives and a nominating
committee chair at a company with three Committees if independent outside directors of the subject
company account for less than 1/3 of the Board after the AGM. However, this shall not apply
if we confirm sufficient planning or special circumstances on increasing the number of independent
outside directors in engagements.
●
In case the subject company has a parent company, we generally consider voting against
the appointment of top executives and a nominating committee chair at a company with three
Committees if independent outside directors account for less than half of the Board after the AGM.
However, this shall not apply if we confirm sufficient planning or special circumstances on increasing
the number of independent outside directors in engagements.
(2)
Attendance rate and concurrent duties
●
All members are expected to attend board and respective committee meetings in principle.
A Company is generally obligated to facilitate all members to attend these meetings. We generally
vote against the reappointment of board directors who attended less than 75% of board or respective
committee meetings.
●
We take into account not only the number of attendance but nomination reasons and candidates’ real contributions if disclosed.
●
We take extra care when we assess the capability of board directors who have many
concurrent duties as an outside director or outside statutory auditor of listed companies, as
such cases potentially arise doubts about their capacity given the importance of outside directors’ role and responsibilities. Accordingly, we consider voting against the appointment of board
directors who perform five or more duties as a director or statutory auditor of a listed company
or equivalent company.
●
If a company nominates a board director with many concurrent duties, it should provide
reasonable explanations. It is also desirable that the company contrives disclosure timing and
methods to allow investors to understand the situation enough.
(3)
Company’s business performance
●
We consider voting against the reappointment of board directors if the subject company
made a loss for the three consecutive years during their tenures.
E-20
●
We consider voting against the reappointment of board directors if we judge that the subject company’s business performance significantly lags the peers in the same industry during their
tenures.
●
We consider voting against top executives if, concerning capital efficiency including
return on capital, business strategies achieving corporate value expansion and sustainable growth are
not demonstrated, and constructive dialogues are not conducted.
(4)
Company’s anti-social activities
●
If we judge that a corporate scandal damages or is likely to damage shareholder value
with having a significant effect on society during a board tenure, we conduct adequate dialogues
with the subject company on the background and subsequent resolutions of the scandal. Based on the
dialogues, we decide how to vote on the reappointment of top executives, board directors in charge
of those cases and audit committee board members at a company with Audit Committee or three Committees,
considering the impact on shareholder value.
●
With respect to domestic corporate scandals, at the time a company receives administrative
dispositions to cartel, bid-rigging, and so on from authorities, such as the Fair
Trade Commission, we consider voting against the reappointment of top executives, directors in charge and
audit committee board members at a company with Audit Committee or three Committees. However, in case
final dispositions are subsequently determined based on appeal or complaints resolutions,
we do not vote against the reappointment again at that time. We vote on a case-by-case basis concerning
compensation orders in a civil case, dispositions from the Consumer Affairs Agency
or administrative dispositions from overseas authorities.
●
With respect to administrative dispositions to an unlisted subsidiary or affiliate,
we consider voting against the reappointment of top executives, directors in charge and audit committee
board members at a company with Audit Committee or three Committees of the holding or parent company.
If a subsidiary or affiliate is listed, we consider voting against the reappointment of
top executives, directors in charge and audit committee board members at a company with Audit Committee
or three Committees of both the subsidiary or affiliate and the holding or parent company.
However, we may vote on a case-by-case basis, depending on the importance of the disposition to the
subsidiary or affiliate, its impact on the holding or parent company’s financial performance, and so on.
●
With respect to employees’ scandals, if the scandal damages or is likely to damage shareholder value, and we judge that the subject company owes management responsibility, we consider
voting against the reappointment of top executives, directors in charge and audit committee
board members at a company with Audit Committee or three Committees.
●
We consider voting against the reappointment of board directors if the subject company
engages in window dressing or inadequate accounting practices during their tenures.
(5)
Activities against shareholder interest
●
If a company raises capital through an excessively dilutive third-party allotment without a shareholders’ meeting’s approval, we consider voting against the reappointment of board directors, particularly top executives.
●
If a company raises capital through a large-scale public offering without reasonable
explanations, we consider voting against the reappointment of board directors, particularly top executives.
●
If a company does not execute a shareholder proposal regarded as favorable for minority
shareholders receiving the majority support from shareholders or does not make a similar company
proposal at an AGM in the following year, we consider voting against the appointment of top executives.
(6)
Others
●
If a company insufficiently discloses board director candidates’ information, we generally vote against such candidates.
E-21
3. Composition of Board of Directors
While each company’s board structure would differ depending on its size and so on, we believe that a company with three Committees (Nomination, Audit and Remuneration) is desirable to
achieve better governance as a listed company. For a company with Board of Statutory Auditors (Kansayaku)
or Audit Committee, it is also desirable to voluntarily deploy a Nomination Committee, a Remuneration
Committee and other necessary committees. Besides, it is desirable that Board Chair is an independent
outside director. We believe that a highly transparent board composition ensures management
accountability and contributes to sustained enterprise value expansion. Finally, the disclosure of the
third-party assessment on the Board of Directors is desirable.
To strengthen the Board of Directors’ monitoring function and increase its transparency and effectiveness, we believe it is important to ensure gender, nationality, career, and age diversity
in principle. It is desirable that each company adopts a skills matrix that defines the diversity and expertise
required to fulfill the Board’s responsibilities reflecting its situation and selects director candidates accordingly.
We are concerned about retired directors assuming consulting, advisory or other similar
positions which could negatively impact transparency and decision making of the Board. If such positions
exist, and retired directors assume them, it is desirable that the company discloses their existence,
their expected roles and contributions and compensations for such posts.
(1)
Number of board members and change in board composition
●
We decide how to vote on proposals concerning the number of board members and change
in board composition, taking into account the impacts on the subject company and shareholders’ economic interests compared to the current situations.
●
The number of board members should be optimized to make the right management decision
at the right time. We may consider each company’s business situation and scale. However, we generally consider voting against the appointment of top executives and a nominating committee
chair at a company three Committees if the number of board members is expected to exceed 20 without
decreasing from the previous AGM, and reasonable explanations are not given.
●
We generally vote against the appointment of top executives and a nomination committee
chair at a company three Committees if a decrease in outside directors or an increase in internal
directors reduces the percentage of outside directors to less than half of the board members.
●
If there are no females on the Board, we consider voting against the appointment of
top executives and a nomination committee chair at a company three Committees. However, this shall
not apply if we confirm sufficient planning or special circumstances on increasing the number of
female directors in engagements.
●
We believe that board diversity is important and may set a higher target for a female
board member ratio in the future. Similarly, we may set a racial and nationality diversity
target, especially for companies with global business operations.
(2)
Procedures of board director appointment, scope of their responsibilities and so on
●
We decide how to vote on proposals concerning change in board director appointment
procedures, taking into account the rationales, and so on, compared to the current procedures.
●
We generally vote against proposals reducing board directors’ responsibilities for financial damages on fiduciary duty breach.
●
Board directors’ responsibilities include effective monitoring of top executives succession planning. The Nomination Committee at a company with three Committees or the arbitrary Nomination
Committee created at a company with the other governance structures should provide effective
monitoring of successor development and appointment with transparency. It is desirable that an independent
outside
E-22
director serves as Nomination Committee Chair. If we judge that the succession procedure
significantly lacks transparency and rationality, we consider voting against the appointment of
top executives.
4. Appointment of Statutory Auditors (Kansayaku)
We decide how to vote on proposals concerning the appointment of statutory auditors,
taking into account their independence, competence and anti-social activities records (if any), and so
on. We decide how to vote on the reappointment of statutory auditors, taking into account their corporate
governance practices and accountability during their tenures, the company’s anti-social activity records, and so on in addition to the above factors.
Statutory auditors and audit committee board directors at a company with Audit committee
or three Committees should have deep knowledge specialized in accounting, laws and regulations
and should make best efforts to continuously gain knowledge and skills to fulfill the critical role
and responsibilities in the company’s governance. A company should also provide sufficient training opportunities.
(1)
Independence
●
We generally vote against the appointment of outside statutory auditors without independency.
●
In general, a person who has no relationship with the subject company other than a
statutory auditor appointment is regarded as independent.
●
We regard that an outside statutory auditor with a significantly long tenure is not
independent and generally vote against the reappointment of such an outside statutory auditor. We
generally consider voting against the candidate whose tenure is longer than ten years.
(2)
Attendance rate and concurrent duties
●
All statutory auditors are expected to attend board or board of statutory auditors
meetings in principle. A companies is generally obligated to facilitate all statutory auditors to attend these
meetings. We generally vote against the reappointment of statutory auditors who attended less than 75% of
board or board of statutory auditors meetings.
●
We take into account not only the number of attendance but nomination reasons and candidates’ real contributions if disclosed.
●
We take extra care when we assess the capability of statutory auditors who have many
concurrent duties as an outside director or outside statutory auditor of listed companies, as
such cases potentially arise doubts about their capacity given the importance of outside statutory auditors’ role and responsibilities. Accordingly, we consider voting against the appointment of statutory
auditors who perform five or more duties as a board director or statutory auditor of a listed
company or equivalent company. If a company nominates a statutory auditor with many concurrent
duties, it should give reasonable explanations. It is also desirable that the company contrives
disclosure timing and methods to allow investors to understand the situation enough.
(3)
Accountability
●
If there are material concerns about a published audit report or audit procedures,
or insufficiencies of required disclosures, we vote against the reappointment of statutory auditors.
(4)
Company’s anti-social activities
●
If we judge that a corporate scandal damages or is likely to damage shareholder value
with having a significant impact on society during a statutory auditor’s tenure, we conduct adequate dialogues with the subject company on the background and subsequent resolutions of the scandal. Based
on the dialogues, we decide how to vote on the reappointment of statutory auditors, considering the
impact on shareholder value.
●
With respect to domestic corporate scandals, at the time a company receives administrative
E-23
dispositions to cartel, bid-rigging, and so on from authorities, such as the Fair
Trade Commission, we consider voting against the reappointment of statutory auditors. However, in case
the final dispositions are subsequently determined based on appeal or complaints resolutions,
we do not vote against the reappointment again at that time. We vote on a case-by-case basis concerning
compensation orders in a civil case, dispositions from the Consumer Affairs Agency
or administrative dispositions from overseas authorities.
●
With respect to administrative dispositions to an unlisted subsidiary or affiliate,
we consider voting against the reappointment of statutory auditors of the holding or parent company.
If a subsidiary or affiliate is listed, we consider voting against the reappointment of statutory auditors
of both the subsidiary or affiliate and the holding or parent company. However, we may decide
on a case-by-case basis, depending on the importance of the dispositions to the subsidiary or affiliate,
its impact on the holding or parent company’s financial performance, and so on.
●
With respect to employees’ scandals, if the scandal damages or is likely to damage shareholder value, and we judge that the subject company owes management responsibility, we consider
voting against the reappointment of statutory auditors.
●
We consider voting against the reappointment of statutory auditors if the subject
company engages in window-dressing or inadequate accounting practices during their tenures.
5. Composition of Board of Statutory Auditors (Kansayaku)
We decide how to vote on proposals concerning the number of members or change in composition
of the board of statutory auditors, taking into account the impact on the subject company and shareholders’ economic interests compared to the current situations.
●
We consider an increase in statutory auditors favorably. However, in case of a decrease,
we consider voting against the reappointment of top executives unless clear and reasonable explanations
are given.
6. Appointment of Accounting Auditors
We decide how to vote on proposals concerning the appointment and replacement of accounting
auditors, taking into account their competence, audit fee levels, and so on.
●
We generally vote against the reappointment of statutory auditors (Kansayaku) or audit
committee board members at a company with Audit Committee or three Committees if we judge that a company
reappoints an accounting auditor without replacing it despite the following accounting
audit problems.
●
It is determined that an accounting auditor provides an unfair opinion on the company’s financial conditions.
●
In case there are concerns on financial statements, required disclosures are insufficient.
●
In case an accounting auditor has a service contract other than accounting audit services
with the subject company, it is regarded that such a contract creates a conflict of interest
between them.
●
Excessive audit fees are paid.
●
It is regarded that an accounting auditor makes fraud or negligence.
●
If it is regarded that an accounting auditor has issues in other company’s audits, in case a company appoints or reappoints the accounting auditor without replacing it, we take the impact on the company’s corporate value full consideration into voting decisions.
●
We generally vote against proposals concerning accounting auditor replacement if it
is regarded that a company changes an incumbent accounting auditor due to a dispute about accounting
principles.
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7. Compensation for Board Directors, Statutory Auditors (Kansayaku) and Employees
(1)
Board directors’ salaries and bonuses
●
It is desirable to increase the proportion of stock incentive plans in board directors’ salaries and bonuses, on condition that a performance-based compensation structure is established, transparency,
such as disclosures of a benchmark or formula laying the foundations for calculation, ensures
accountability, and the impact on shareholders, such as dilution, are taken into considerations. The Remuneration
Committee at a company with three Committees (Nomination, Audit and Remuneration)
or the arbitrary Remuneration Committee preferably deployed at a company with the other governance
structures should ensure the accountability of compensation schemes. It is desirable that an independent
outside director serves as Remuneration Committee Chair.
●
We consider voting against proposals seeking approval for salaries and bonuses in
the following cases.
●
Negative correlation between company’s financial performance and directors’ salaries and bonuses are observed.
●
Inappropriate systems and practices are in place.
●
The total amount of salaries and bonuses is not disclosed.
●
Management failures, such as a significant share price decline or serious earnings
deterioration, are apparent.
●
The remuneration proposal includes people determined to be responsible for activities
against shareholder interest.
●
We generally vote for shareholder proposals requesting disclosure of individual directors’ salaries and bonuses.
●
If a company implements any measures ensuring transparency other than disclosure,
we take it into consideration.
●
If there is no proposal seeking approval for directors’ salaries and bonuses, and the compensation structure lacks transparency, we consider voting against the appointment of top executives.
●
We generally vote against bonuses for statutory auditors at a company with Board of
Statutory Auditors and audit committee board members at a company with Audit Committee.
●
We separately consider voting to audit committee board members at a company with three
Committees.
(2)
Stock incentive plans
●
We decide how to vote on proposals concerning stock incentive plans, including stock
options and restricted stock units, taking into account the impact on shareholder value and rights,
compensation levels, the scope, the rationales, and so on.
●
We generally vote against proposals seeking to lower the strike price of stock options.
●
We generally vote for proposals seeking to change the strike price on condition that shareholders’ approval is required every time.
●
We generally vote against stock incentive plans if the terms and conditions for exercising
options, including equity dilution, lack transparency. We generally consider voting against
proposals potentially causing 10% or more equity dilution.
●
It is desirable that stock incentive plans is a long-term incentive aligned with sustainable
growth and corporate value expansion. As such, we generally vote against stock incentive plans
allowing recipients to exercise all the rights within two years after vested for the subject
fiscal year. However,
E-25
this shall not apply to recipients who retire during the subject fiscal year. We assess
the validity if a vesting period is regarded as too long.
●
We generally vote against stock incentive plans granted to statutory auditors and
audit committee board members at a company with Audit Committee.
●
We separately consider stock incentive plans granted to audit committee board members,
including both inside and outside directors, at a company with three Committees.
●
We generally vote against stock incentive plans granted to any third parties other
than employees.
●
We generally vote against stock incentive plans in case a company is likely to adopt
the plans as takeover defense.
(3)
Employee stock purchase plan
●
We decide how to vote on proposals concerning employee stock purchase plans, taking
into account the impact on shareholder value and rights, the scope and the rationales, and so on.
(4)
Retirement benefits for board directors
●
We decide how to vote on proposals concerning grant of retirement benefits, taking
into account the scope and scandals (if any) of recipients and business performance and scandals (if
any) of the subject company, and so on.
●
We generally vote for proposals granting retirement benefits if all the following
criteria are satisfied.
●
The granted amount is disclosed.
●
Outside directors, statutory auditors and audit committee board members at a company
with Audit Committees are excluded.
●
Recipients do not cause any significant scandals during their tenures.
●
The subject company does not make a loss for the three consecutive years, or its business
performance is not determined to significantly lag behind the peers in the same industry.
●
The company does not cause scandals that significantly impact society and damage,
or are unlikely to damage, shareholder value during their tenures.
●
The company does not engage in window-dressing or inadequate accounting practices
during their tenures.
8. Cross-shareholdings
If a company holds shares for the sake of business relations (cross shareholdings),
the company should explain the medium- to long-term business and financial strategies, including capital
costs, and disclose proxy voting guidelines, voting results, and so on. If the company does not give reasonable
explanations and engage in constructive dialogues, we consider voting against the appointment of
top executives. It is important that the company does not hinder the sales/reduction of cross shareholdings
when a policy shareholder intends.
●
If a company's cross shareholdings account for 20% or more of its net assets, we generally
consider voting against the appointment of top executives. However, this shall not apply if
we confirm that the company makes a reduction, does sufficient planning or has industry- specific circumstances
that should be taken into consideration in engagement.
9. Capital Policy
As a listed companies’ capital policy is likely to significantly impact shareholder value and interests, a company should implement a rational capital policy and explain capital policy guidelines
to shareholders. We consider voting against proposals concerning capital policies that we judge damage
shareholder value. If a
E-26
company has a capital policy that is not part of proposals at an AGM but regarded
to damage shareholder value, we consider voting against the reappointment of board directors.
●
It is undesirable that a company intends to maintain or increase so-called “friendly” stable shareholders and infringes minority shareholders’ rights by the third-party allotment, treasury stocks transfer or company management holdings’ transfer to foundations affiliated with the company.
(1)
Change in authorized shares
●
We decide how to vote on proposals seeking to increase authorized shares, taking into
account the impact on shareholder value and rights, the rationales, the impact on the sustainability
of stock market listing and a going concern, and so on.
●
We generally vote for proposals seeking to increase authorized shares if we judge
that not increasing authorized shares is likely to lead to delisting or have a significant impact on a
going concern.
●
We generally vote against proposals seeking to increase authorized shares after an
acquirer emerges.
(2)
New share issue
●
We decide how to vote on new share issues, taking into account the rationales, the
terms and conditions of issues, the impact of dilution on shareholder value and rights and the impact on
the sustainability of stock market listing or a going concern, and so on.
(3)
Share repurchase and reissue
●
We decide how to vote on proposals concerning share repurchase or reissue, taking
into account the rationales, and so on.
(4)
Stock split
●
We generally vote for proposals seeking a stock split.
(5)
Consolidation of shares (reverse stock split)
●
We decide how to vote on proposals seeking consolidation of shares, taking into account
the rationale, and so on.
(6)
Preferred shares
●
We generally vote against proposals seeking to issue blank-cheque preferred shares
or increase authorized shares without specifying voting rights, dividends, conversion and other
rights.
●
We generally vote for proposals seeking to issue preferred shares or increase authorized
shares if voting rights, dividends, conversion and other rights are specified, and those rights are
regarded as reasonable.
●
We generally vote for proposals requiring approvals for preferred shares issues from
shareholders.
(7)
Convertible bonds
●
We decide how to vote on proposals seeking to issue convertible bonds, taking into
account the number of new shares, the time to maturity, and so on.
(8) Corporate bonds and credit facilities
●
We decide how to vote on proposals concerning a corporate bond issue or a credit facility
expansion, taking into account the subject company’s financial conditions, and so on.
(9) Debt capitalization
●
We decide how to vote on proposals seeking to change the number of authorized shares
or issue shares for debt restructuring, taking into account the terms and conditions of the change
or the issue, the impact
E-27
on shareholder value and rights, the rationales, the impact on the sustainability
of stock market listing and a going concern, and so on.
(10) Capital reduction
●
We decide how to vote on proposals concerning capital reduction, taking into account
the impact on shareholder value and rights, the rationales and the impact on the sustainability
of stock market listing and a going concern, and so on.
●
We generally vote for proposals seeking capital reduction following standard accounting
procedures.
(11) Financing plan
●
We decide how to vote on proposals concerning a financing plan, taking into account
the impact on shareholder value and rights, the rationales and the impact on the sustainability
of stock market listing and a going concern, and so on.
(12) Capitalization of reserves
●
We decide how to vote on proposals seeking capitalization of reserves, taking into
account the rationales, and so on.
10. Amendment to Articles of Incorporation and Other Legal Documents
(1) Change in an accounting period
●
We generally vote for proposals seeking to change an accounting period unless it is
regarded as an aim to delay an AGM.
(2) Amendment to articles of incorporation
●
We decide how to vote on proposals to amend an article of incorporation, taking into
account the impact on shareholder value and rights, the necessity, the rationales, and so on.
●
We generally vote for proposals seeking to amend an article of incorporation if it
is required by law.
●
We generally vote against proposals seeking to amend an article of incorporation if
we judge that it is likely to infringe shareholder rights or damage shareholder value.
●
We generally vote for transition to a company with three Committees.
●
We decide how to vote on proposals seeking to relax or eliminate special resolution
requirements, taking into account the rationale.
●
We are concerned about retired directors assuming advisory, consulting, or other similar
positions which could negatively impact on transparency and decision making of the Board of
Directors. We generally vote against proposals seeking to create such a position.
●
We generally vote for proposals seeking to authorize a company to hold virtual-only
meetings, taking into account the impact on shareholder value and rights.
●
We will consider, among other things, a company’s practices, jurisdiction and disclosure, including the items set forth below:
●
meeting procedures and requirements are disclosed in advance of a meeting detailing
the rationale for eliminating the in-person meeting,
●
safeguard and clear and comprehensive description as to how and when shareholders
submit and ask questions either in advance of or during the meeting,
●
disclosure regarding procedures for questions received during the meeting, but not
answered due to time or other restrictions, and
E-28
●
description of how shareholder rights will be protected in a virtual-only meeting
format including the ability to vote on proposals during the time the polls are open.
(3) Change in a quorum for an annual general meeting (AGM)
●
We decide how to vote on proposals concerning change in quorum for an AGM, taking
into account the impact on shareholder value and rights, and so on.
11. Company Organization Change
(1) Change in a registered company name and address
●
We decide how to vote on proposals seeking to change a registered company name, taking
into account the impact on shareholder value, and so on.
●
We generally vote for proposals seeking to change a registered address.
(2) Company reorganization
●
We decide how to vote on proposals concerning the following company reorganization,
taking into account their respective impacts on shareholder value and rights, the subject company’s financial conditions and business performance, and the sustainability of stock market listing
or a going concern, and so on.
Mergers and acquisitions
Business transfers
Company split (spin-off)
Asset sale
Company sale
Liquidation
12. Proxy Fight
(1)
Proxy fight
●
We decide how to vote on proposals concerning the appointment of directors with opposition
candidates, taking into account their independence, competence, anti-social activity records (if
any), corporate governance practices and accountability of the candidates and business performance
and anti-social activity records (if any) of the subject company, the proxy fight background, and
so on.
(2)
Proxy context defense
●
Classified board
●
We generally vote against proposals seeking to introduce a classified board.
●
We generally vote for proposals seeking to set a director's term of one year.
●
Shareholder rights to remove a director
●
We generally vote against proposals seeking to tighten requirements for shareholders
to remove a director.
●
Cumulative voting
●
We decide how to vote on proposals seeking to introduce cumulative voting for director
appointments, taking into account the background, and so on.
E-29
●
We decide how to vote on proposals seeking to terminate cumulative voting for director
appointment, taking into account the background, and so on.
13. Takeover Defense
We believe that management and shareholder interest is not always aligned. As such,
we generally vote against the creation, amendment and renewal of takeover defense measures that we judge
decrease shareholder value or infringes shareholder rights. We generally vote against the reappointment
of directors if takeover defense measures are not part of proposals at an AGM but are regarded to
decrease shareholder value or infringes shareholder rights.
●
Relaxing requirements to amend articles of incorporation and company policies
●
We decide how to vote on proposals seeking to relax requirements to amend articles
of incorporation or company policies, taking into account the impact on shareholder value and rights,
and so on.
●
Relaxing of requirements for merger approval
●
We decide how to vote on proposals seeking to relaxing requirements for merger approval,
taking into account the impact on shareholder value and rights, and so on.
14. Environment, Social and Governance (ESG)
We support the United Nations Principles for Responsible Investment (UN PRI) and acknowledge
that company’s ESG practices are an important factor in investment decision making. Thus, we consider voting against the reappointment of top executives and directors in charge if we judge that
there is an issue that could significantly damage corporate value. We consider voting for proposals related
to ESG materiality, including climate change or diversity, if we judge that such proposals contribute
to preventing from damaging or expanding corporate value. If not, we consider voting against such proposals.
15. Disclosure
Disclosure and constructive dialogues based thereon are important in proxy voting
and investment decision making. Furthermore, proactive disclosure and effective engagement are desirable as
demand for ESG disclosure, including climate change, has been increasing, and the disclosure frameworks
have been rapidly progressing.
●
We generally vote against proposals that lack sufficient disclosure to make proxy
voting decisions.
●
We generally vote for proposals seeking to enhance disclosures if such information
is beneficial to shareholders.
●
If a company’s financial and non-financial disclosures is significantly poor, and if the level of investor relations activities by management or people in charge is significantly low, we consider
voting against the reappointment of top executives and directors in charge.
16. Conflict of Interest
We abstain from voting proxies of the following companies that are likely to have
a conflict of interest. We also abstain from voting proxies with respect to the following investment trusts that
are managed by us or Invesco group companies, as a conflict of interest may rise.
●
Companies and investment trusts that we abstain from voting proxies:
●
Invesco Ltd.
We have established the Conflict of Interest Management Policy. In the situation that
may give rise to a conflict of interest, we aim to control it in the best interests of clients (investors)
and beneficiaries. The Compliance department is responsible for governing company-wide control of a conflict
of interest. The Compliance department is independent of the Investment and Sales departments and shall
not receive any
E-30
command or order for the matters compliant with the laws and regulations, including
a conflict of interest, from the Investment and Sales departments.
Proxy voting and stewardship activities are reported to the Responsible Investment
Committee. The Responsible Investment Committee approves them. Besides, the Compliance department
reviews whether conflicts of interest are properly managed in proxy voting and then reports the results
to the Conflict of Interest Oversight Committee. Furthermore, the results are reported to the Executive
Committee in Tokyo and the Invesco Proxy Advisory Committee.
17. Shareholder Proposals
We vote on a case-by-case basis on shareholder proposals while we follow the Proxy
Voting Guidelines in principle.
DISCLAIMER: The English version is a translation of the original in Japanese for information
purposes only. In case of a discrepancy, the Japanese original will prevail. You can
download the Japanese version from our website: http://www.invesco.co.jp/footer/proxy.html.
2092318-JP
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Invesco Asset Management (India) Pvt. Ltd.
Voting Policy
A.
Preamble
SEBI vide its circular reference no. SEBI/IMD/Cir No.18/198647/2010 dated March 15,
2010 has stated that mutual fund should play an active role in ensuring better corporate governance of
listed companies. The said circular stated that the AMCs should disclose their general policies and procedures
for exercising the voting rights in respect of shares held by them.
Subsequently, SEBI vide its circular ref. no. CIR/IMD/DF/05/2014 dated March 24, 2014,
SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016, SEBI vide its circular ref. no.
CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019 and SEBI/HO/IMD/DF4/CIR/P/2021/29 dated March 5,
2021 have amended certain provisions of above mentioned circular specifying additional compliance
/ disclosure requirements with respect to exercise of voting rights by mutual funds so as to further
improve transparency as well as encourage Mutual Funds/AMCs to diligently exercise their voting rights
in best interest of the unitholders. In this respect, AMFI vide its best practices guidelines circular no.
35P/ MEM-COR/ 51/ 2020-21 dated March 09, 2021 has communicated that it would be mandatory for the Mutual Funds
to cast their votes ‘For’ or ‘Against’ and Abstention will not be counted as having voted.
This policy is drafted in pursuance of SEBI circular dated March 15, 2010 read with
March 24, 2014, August 10, 2016, December 24, 2019 and circular dated March 5, 2021 and provides general
philosophy, broad guidelines, procedures and principles for exercising voting rights.
Invesco Asset Management (India) Private Limited (“IAMI”) is an Investment Manager to the scheme(s) of Invesco Mutual Fund (“the Fund”). As an investment manager, IAMI has fiduciary responsibility to act in the best interest of unit-holders of the Fund. This responsibility includes exercising
voting rights attached to the securities of the companies in which the schemes of the Fund invest. It will be IAMI’s endeavor to participate in the voting process (i.e. exercise voting rights) based on the philosophy
enunciated in this policy.
B.
Philosophy of Voting Policy
Good corporate governance ensures that a corporation is managed keeping in mind the
long-term interest of shareholders. Promoting good corporate governance standards forms an integral part
of corporate ownership responsibilities.
With this in the forefront, IAMI expects all corporations, in which it invests in,
to comply with high corporate governance standards. Accordingly, as the decision to invest is generally an endorsement
of sound management practices, IAMI may generally vote with the management of these corporations.
However, when IAMI is of the view that the unit holders will be prejudiced by any such proposal,
then it may vote against such proposal to protect the interest of unit holders. Also, in case of resolutions
moved by the shareholders of the company, IAMI will exercise its voting rights in the best interest
of its unit holders. Other than matters mentioned under section D (I), in certain circumstances, IAMI may also
decide to refrain from voting where it has insufficient information or there is conflict of interest or it
does not have a clear stance on the proposal under consideration.
IAMI, as an investment manager, will generally vote in accordance with the Voting
Policy. However, it may deviate from the policy if there are particular facts and/or circumstances that warrant
for such deviation to protect the interests of unit-holders of the Fund.
C.
Conflict of Interest in Exercising Voting Rights
IAMI, under schemes, may invest in the securities of associate/group companies (to
the extent permitted under SEBI (Mutual Funds) Regulations, 1996 as amended from time to time). Further,
IAMI is an Indian subsidiary of global organization consisting of many affiliates. Moreover, schemes
under IAMI may invest in securities of companies which have invested in schemes of Invesco Mutual Fund. Such
scenarios may lead
E-34
to a situation creating conflict of interest. Potential Conflict of interest may also
arise if IAMI and the investee company are associates or are part of the same group; or the investee company
holds a material ownership interest in IAMI; a nominee of IAMI has been appointed as a director of
the investee company or having cross-directorships, the Investee Company is an entity participating in the
distribution of investment products advised or administered by the Investment Manager and/or any of its affiliate;
the Investee Company is a client of Investment Manager and/or its affiliates.
IAMI will attempt to avoid conflict of interest and will exercise its voting rights
in the best interest of the unit-holders. Voting decisions in such cases will be based on merits without any bias and the same
parameters will be applied for taking voting decisions as are applied for other companies.
In cases where there is a potential conflict of interest, IAMI will vote exactly as
per recommendations of the proxy voting advisory entity with no modifications whatsoever. In case there is need
for a clearer direction, the matter may be referred to the Investment committee for its guidance. Rationale
for decision taken/ voting on the issue shall be recorded.
D.
Voting Policy Guidelines
I. The matters regarding, but not limited to, which the IAMI will exercise the voting
rights in the Annual General Meeting (AGMs) /Extra Ordinary General Meeting (EGMs)/ Through Postal Ballots/Electronic
voting of the investee companies are as follows:
●
Corporate governance matters, including changes in the state of incorporation, merger
and other corporate restructuring and anti- takeover provisions.
●
Changes to capital structure, including increase and decrease of capital and preferred
stock issuances.
●
Stock option plans and other management compensation issues.
●
Social and corporate responsibility issues.
●
Appointment and Removal of Directors.
●
Any other issue that may affect the interest of the shareholders in general and interest
of the unit- holders in particular.
●
Related party transactions of the investee companies (excluding own group companies).
For this purpose, “Related Party Transactions” shall have same meaning as assigned to them in clause (zc) of Sub-Regulation (1) of Regulation (2) of the SEBI (Listing Obligation and Disclosure
Requirements) Regulations, 2015.
Effective April 01, 2021, voting shall be mandatory for all resolutions mentioned
above. Further, for all remaining resolutions which are not covered in (I) above, IAMI will compulsorily be
required to cast votes with effect from April 01, 2022.
II. In case of the Mutual Funds having no economic interest on the day of voting,
it may be exempted from compulsorily casting of votes.
III. The vote shall be cast at Mutual Fund Level. However, in case Fund Manager/(s)
of any specific scheme has strong view against the views of Fund Manager/(s) of the other schemes, the voting
at scheme level shall be allowed subject to recording of detailed rationale for the same.
IAMI will exercise voting rights keeping in mind the need to improve economic value
of the companies and importance of protecting the interests of unit holders of its schemes but subject
to importance of the matter and cost/time implications. The analysts in equity team will make recommendations
on key voting issues and same will be approved by the Head of Equity or Fund Manager. In case of conflicts
or need for a clearer direction, the matter may be referred to the Voting Committee for its guidance.
E-35
E.
Voting Committee
As a guiding principle, IAMI shall exercise voting rights solely in the interest of
unit holders of the Fund. IAMI has constituted a Voting Committee (VC).The Committee is empowered to provide
guidance on the voting matters referred to it, establish voting guidelines and procedures as it may
consider necessary and is responsible to ensure that these guidelines and procedures are adhered to and also
make changes in the Policy as may be required from time to time. The members of this Committee are as
follows:
●
CEO / COO/Head - Operations (any one)
●
Head of Compliance or Member of compliance team
●
Head of Equity or Fund Manager (equity)
●
Head of Fixed Income and/ or Fund Managers (fixed income)
●
Any other representative as the Committee may co-opt from time to time
Broad Guidelines for functioning of Voting Committee are:
1. Voting Committee may record its decisions by circulation including decisions/guidance
on voting matters that have been referred to it.
2. Voting Committee may consult with outside experts and other investors on issues
as it may deem fit.
3. Decisions of Voting Committee should be maintained by compliance.
4. Details of voting decisions taken by the Fund Management team will be presented
to the Voting Committee/Investment Committee.
5. Voting Committee may review this policy from time to time.
F.
Steps (Procedure) in Exercising Voting Rights
The following points outline the key steps in exercising Voting rights:
1) Notification of company AGMs / EGMs and relevant voting items to Fund Management
Team.
2) IAMI shall endeavor to vote for all holdings of the Fund aggregated for all its
schemes. The voting will cover all equity holding across all schemes of Invesco Mutual Fund including passive
investments like Index Funds, Exchange Traded Fund etc.
3) Custodian will send ballots and or other relevant papers (notice of meeting, proxy
form, attendance slips etc.) to IAMI relating to AGM/EGM as soon as it receives.
4) The fund management team is authorized to decide on voting decisions but may refer
decisions to the Voting Committee for its guidance/direction.
5) Based on internal discussion within the fund management team, a decision would
be arrived to vote on the proposed resolution. Routine matters and ordinary resolutions like adoption of
financials (unless there are significant auditor qualifications), dividend declaration, general updating/corrective
amendments to the Articles of Association would also be considered for voting purpose. However, IAMI may on a
case to case basis, not vote on such resolutions, if it deems fit to do so.
6) IAMI will generally support and vote “for” proposals which are likely to result in maximizing long-term investment returns for unit holders. IAMI would not support and will vote “against” proposals that appear to be detrimental to the company financials / interest of the minority shareholders or which
would adversely impact shareholders’ value.
7) IAMI may exercise its voting rights by authorizing its own executives/authorized
representative to attend the AGM/EGM or may instruct the Custodian to exercise voting rights in accordance
with the instructions of IAMI.
E-36
8) IAMI may exercise its voting rights through Postal Ballot or may use Electronic
voting mechanism, wherever available, either through its own executives or by authorizing the Custodian.
The records of voting exercised through Postal Ballot will be maintained by IAMI.
9) IAMI may utilize the services of third party professional agencies for getting
in-depth analyses of proposals and vote recommendations. However, the recommendations of the third party
agencies will be non-binding in nature. IAMI will perform due diligence on proxy voting advisory firms at the
time of initial selection as well as at the time of renewal of services of the proxy voting. The due diligence
will be carried out on parameters viz. resource strength, Companies under coverage, extent of institutional
ownership, depth of analysis, quality of advice / recommendations, analyst access & support, timely availability
of reports, composition of board of directors, advisory board and top management, web-based interface
platform and clientele.
10) The rationale supporting each voting decision (For, Against and Abstain) will
be recorded and such records will be retained for number of years (currently 8 years) as may be required
under the SEBI (Mutual Funds) Regulations, 1996 from time to time.
G.
Details of Service Provider
IIAS (Institutional Investor advisory Services) has been appointed as our proxy voting
advisor. The scope of the agreement with IIAS includes: IIAS shall provide non-binding Voting Recommendations
for each Voting Event for Investee companies, access to their research portal and analysts for any
discussion, access to their online voting management systems etc. The details of the service provider (currently
IIAS) are provided in the “Rationale for continuation of Proxy Voting advisory report” which is prepared once in 2 years. IIAS has standardized voting policies and has a committee-based voting decision making
system. Their analysis to arrive at the recommendations are detailed in nature and recommendations are fairly
objective. However, the recommendations of IIAS are non-binding in nature, and IAMI, reserves the right
to vote differently based on their own judgement on the matter involved.
H.
Disclosures
The disclosures of voting rights exercised are as follows:
●
Details of votes cast by the schemes of the Fund will be uploaded on the website of
IAMI (www.invescomutualfund.com) (in machine readable spreadsheet form) on a quarterly basis in the prescribed format within the stipulated timelines as prescribed by SEBI from time
to time.
●
Details of votes cast by the schemes of the Fund will be uploaded on the website of
IAMI (www.invescomutualfund.com) on an annual basis in the prescribed format. Further, AMCs shall provide the web link in the Annual Reports of the schemes of the Fund regarding the
disclosure of voting details.
●
Summary on actual exercise of votes cast and its break-up in terms of total number
of votes cast in favor, against or abstained will also be uploaded on the website of IAMI (www.invescomutualfund.com) on an annual basis.
I.
Certification/Confirmation
●
On an annual basis, IAMI will obtain a certification from scrutinizer (in terms of
Rule 20 (3) (ix) of Companies (Management and Administration) Rules, 2014) on voting reports and the same
will be placed before the Boards of AMC and Trustee. The scrutinizer’s certificate will form part of Annual Report and will also be uploaded on the website of IAMI (www.invescomutualfund.com).
●
A confirmation shall also be submitted by Trustees in its half yearly report to SEBI
that IAMI have voted on important decisions affecting interests of unitholders.
E-37
APPENDIX F - CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial
holders of 5% or more of the outstanding shares of each class of the Funds' equity securities and
the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated
below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also
owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a
Fund is presumed to “control” that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of June 3, 2024.
Invesco Corporate Bond Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
AMERICAN ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
—
|
19.19%
|
—
|
40.79%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
17.53%
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
46.00%
|
19.83%
|
—
|
—
|
—
|
91.77%
|
|
|
|
|
|
|
|
|
|
JOHN HANCOCK TRUST COMPANY LLC
200 BERKELEY ST STE 7
BOSTON MA 02116-5038
|
—
|
—
|
—
|
—
|
36.80%
|
—
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
7.72%
|
—
|
7.99%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
MLPF&S FOR THE SOLE BENEFIT OF
ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 2ND FL
JACKSONVILLE FL 32246-6484
|
—
|
—
|
—
|
6.69%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
—
|
—
|
—
|
25.43%
|
15.41%
|
—
|
|
|
|
|
|
|
|
|
|
NATIONWIDE TRUST COMPANY FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
—
|
—
|
—
|
—
|
38.57%
|
—
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLAZA
JERSEY CITY NJ 07399-0002
|
—
|
—
|
—
|
8.14%
|
—
|
—
|
|
|
|
|
|
|
|
|
F-1
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
STATE STREET BANK AND TRUST AS
CUST FBO ADP ACCESS PRODUCT
1 LINCOLN STOTECH CTR FL 6
BOSTON MA 02111
|
—
|
—
|
10.98%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
—
|
6.53%
|
—
|
—
|
—
|
—
|
Invesco Global Real Estate Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
AMERICAN ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
—
|
—
|
—
|
10.22%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
5.13%
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
CAPITAL BANK & TRUSTCO TTEE FBO
TECHMASTERS 401K PS
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
6.56%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
25.02%
|
8.32%
|
—
|
—
|
—
|
27.69%
|
|
|
|
|
|
|
|
|
|
EMPOWER TRUST FBO
EMPLOYEE BENEFIT CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
—
|
—
|
15.17%
|
|
|
|
|
|
|
|
|
|
EMPOWER TRUST FBO
KNAUF INSULATION INC
8525 E ORCHARD RD 6T3
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
—
|
12.37%
|
—
|
|
|
|
|
|
|
|
|
|
MAUREEN K WOLFSON TTEE
EQUITABLE LIFE FOR SEPARATE ACCT
ON BEHALF OF VARIOUS 401K EXPEDITOR
KEN BUTKA-EQUITABLE
200 PLAZA DR.HM/2
SECAUCUS NJ 07094-3607
|
—
|
—
|
16.00%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
MORGAN STANLEY SMITH BARNEY LLC
FOR EXCLUSIVE BENEFIT OF CUSTOMERS
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1965
|
—
|
—
|
—
|
33.37%
|
—
|
—
|
|
|
|
|
|
|
|
|
F-2
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
—
|
5.88%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310-2010
|
—
|
—
|
—
|
16.73%
|
41.86%
|
—
|
|
|
|
|
|
|
|
|
|
NATIONWIDE LIFE INSURANCE CO
DCVA
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
12.95%
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONWIDE TRUSTCO FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
—
|
—
|
—
|
—
|
5.20%
|
—
|
|
|
|
|
|
|
|
|
|
SEI PRIVATE TRUST COMPANY
C/O TRUIST
ONE FREEDOM VALLEY DRIVE
OAKS PA 19456-9989
|
—
|
—
|
—
|
—
|
—
|
21.91%
|
|
|
|
|
|
|
|
|
|
TIAA TRUST, N.A. AS CUST/TTEE
OF RETIREMENT PLANS
RECORDKEPT BY TIAA
ATTN: FUND OPERATIONS
8500 ANDREW CARNEGIE BLVD
CHARLOTTE NC 28262-8500
|
—
|
—
|
—
|
—
|
8.00%
|
—
|
|
|
|
|
|
|
|
|
|
WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
—
|
5.18%
|
—
|
8.68%
|
—
|
—
|
Invesco Government Money Market Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||||
|
|
Cash Reserve
|
Class A
|
Class AX
|
Class C
|
Class CX
|
Class R
|
Class Y
|
Investor Class
|
Class R6
|
|
ASCENSUS TRUSTCO
FBO
KAYLA LOGISTICS
401K PS PL
P O BOX 10758
FARGO ND 58106-
0758
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
5.65%
|
|
|
|
|
|
|
|
|
|
|
|
F-3
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||||
|
|
Cash Reserve
|
Class A
|
Class AX
|
Class C
|
Class CX
|
Class R
|
Class Y
|
Investor Class
|
Class R6
|
|
BNY MELLON
INVESTMENT
SERVICING INC
FBO PRIMERICA
FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA
19406-1212
|
13.79%
|
—
|
31.96%
|
—
|
9.24%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
44.77%
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITC CUST IRA R/O
IRA R/O ANGIE COOK
DALLAS TX
|
—
|
—
|
—
|
—
|
6.26%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
ITC CUST IRA R/O
IRA R/O EDWARD F
GALLIEN
DERRY NH
|
—
|
—
|
—
|
—
|
36.49%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
ITC CUST IRA
IRA JOSEPH H
PASTON
TAMPA FL
|
—
|
—
|
—
|
—
|
8.58%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
ITC
LINCOLN FORGE
DOUGLAS PUHL
SOUTHGATE MI
|
—
|
—
|
—
|
—
|
5.18%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
ITC
ODEUM INC
ROBERTO A MOLINA
BARTLETT IL
|
—
|
—
|
—
|
—
|
5.92%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
MID ATLANTIC
TRUSTCO FBO
MATC OMNIBUS DIV
REINVEST LTCG RE
1251 WATERFRONT
PLACE SUITE 525
PITTSBURGH PA
15222-4228
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
28.69%
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
10.64%
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
F-4
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||||
|
|
Cash Reserve
|
Class A
|
Class AX
|
Class C
|
Class CX
|
Class R
|
Class Y
|
Investor Class
|
Class R6
|
|
NATIONAL FINANCIAL
SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON
BLVD FL 5
JERSEY CITY NJ
07310-2010
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
13.12%
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
5.67%
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ
07399-0001
|
—
|
5.14%
|
—
|
—
|
—
|
—
|
76.00%
|
24.19%
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
7.72%
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELIANCE TRUST CO
TTEE
FBO ADP ACCESS
LARGE MARKET 401K
PO BOX 78446
ATLANTA GA 30357
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
16.53%
|
|
|
|
|
|
|
|
|
|
|
|
|
STATE STREET BANK
AND TRUST AS
CUST FBO ADP
ACCESS PRODUCT
1 LINCOLN STOTECH
CTR FL 6
BOSTON MA 02111
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
18.66%
|
F-5
Invesco High Yield Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
9.45%
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1901
|
—
|
—
|
19.91%
|
10.50%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
37.59%
|
21.53%
|
—
|
—
|
—
|
37.08%
|
|
|
|
|
|
|
|
|
|
INVESCO GROWTH ALLOCATION FUND
FUND OMNIBUS ACCOUNT
KGHL
11 GREENWAY PLZ STE 2500
HOUSTON TX 77046-1188
|
—
|
—
|
—
|
—
|
—
|
6.44%
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
—
|
33.68%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
MORGAN STANLEY SMITH BARNEY LLC
FOR EXCLUSIVE BENEFIT OF CUSTOMERS
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1965
|
—
|
—
|
6.70%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
—
|
5.50%
|
7.22%
|
7.36%
|
42.72%
|
—
|
|
|
|
|
|
|
|
|
|
NATIONWIDE TRUST COMPANY FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
—
|
—
|
—
|
—
|
15.25%
|
—
|
|
|
|
|
|
|
|
|
|
OPP PORT SERIES CONS INV
ATTN: CYNTHIA SMITH
PO BOX 4333
HOUSTON TX 77210-4333
|
—
|
—
|
—
|
—
|
—
|
8.17%
|
|
|
|
|
|
|
|
|
|
OPPENHEIMER PORTFOLIO SERIES
ACTIVE ALLOCATION
ATTN: CYNTHIA SMITH
11 GREENWAY PLZ FL 16
HOUSTON TX 77046-1100
|
—
|
—
|
—
|
—
|
—
|
13.04%
|
|
|
|
|
|
|
|
|
F-6
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
OPPENHEIMER PORTFOLIO SERIES
MODERATE INVESTOR
ATTN CYNTHIA SMITH
11 GREENWAY PLZ FL 16
HOUSTON TX 77046-1100
|
—
|
—
|
—
|
—
|
—
|
19.68%
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
|
—
|
8.81%
|
8.37%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
UBS WM USA
OMNI ACCOUNT M/F
ATTN DEPARTMENT MANAGER
SPEC CDY A/C EXCL BEN CUST UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
—
|
5.65%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
VRSCO
FBO VTC CUST TTEE FBO
RET PLANS
2929 ALLEN PARKWAY A6-20
HOUSTON TX 77019-7100
|
—
|
—
|
—
|
—
|
29.44%
|
—
|
Invesco Income Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
14.73%
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1901
|
—
|
—
|
—
|
8.33%
|
—
|
—
|
86.68%
|
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
6.03%
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
INVESCO ADVISERS INC
ATTN: CORPORATE CONTROLLER
1555 PEACHTREE ST NE STE 1800
ATLANTA GA 30309-2499
|
—
|
—
|
—
|
—
|
—
|
—
|
13.14%
|
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
14.27%
|
—
|
18.82%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
MATRIX TRUST COMPANY CUST. FBO
FRESH MEADOW MECHANICAL
717 17TH STREET
SUITE 1300
DENVER CO 80202-3304
|
—
|
—
|
6.03%
|
—
|
—
|
—
|
—
|
F-7
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
|
|
|
|
|
|
|
|
|
MATRIX TRUST COMPANY CUST. FBO
INTERNATIONAL FEED COM CORP
717 17TH STREET
SUITE 1300
DENVER CO 80202-3304
|
—
|
—
|
7.96%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310-2010
|
—
|
—
|
—
|
21.75%
|
30.33%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
NATIONWIDE TRUST COMPANY FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
—
|
—
|
—
|
—
|
—
|
65.59%
|
—
|
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
|
—
|
—
|
—
|
7.03%
|
—
|
30.48%
|
—
|
|
|
|
|
|
|
|
|
|
|
PRESZLER, LARNER, MERTZ & CO. L.L.P
LYNN M MICHEAU
ABERDEEN WA
|
—
|
—
|
8.13%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
ATTN COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
|
—
|
—
|
—
|
5.26%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
RBC CAPITAL MARKETS LLC
MUTUAL FUND OMNIBUS PROCESSING
OMNIBUS
ATTN MUTUAL FUND OPS MANAGER
250 NICOLLET MALL STE 1400
MINNEAPOLIS MN 55401-7582
|
—
|
—
|
—
|
15.58%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
—
|
—
|
—
|
6.33%
|
—
|
—
|
—
|
Invesco Intermediate Bond Factor Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1901
|
—
|
—
|
—
|
16.27%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FBO CUSTOMERS
12555 MANCHESTER RD
ST LOUIS MO 63131-3710
|
17.76%
|
—
|
—
|
—
|
—
|
74.58%
|
F-8
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
|
|
|
|
|
|
|
|
INVESCO ADVISERS INC
ATTN: CORPORATE CONTROLLER
1555 PEACHTREE ST NE STE 1800
ATLANTA GA 30309-2499
|
—
|
—
|
—
|
—
|
100.00%*
|
—
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
--OMNIBUS CUSTOMER ACCOUNT--
ATTN LINDSAY OTOOLE
4707 EXECUTIVE DRIVE
SAN DIEGO CA 92121-3091
|
—
|
—
|
—
|
27.75%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
MASSACHUSETTS MUTUAL LIFE INSURANCE
1295 STATE STREET MIP M200-INVST
SPRINGFIELD MA 01111-0001
|
5.90%
|
—
|
8.90%
|
—
|
—
|
12.17%
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BEN OF CUSTOMERS
200 LIBERTY STREET
ONE WORLD FINANCIAL CENTER
ATTN MUTUAL FUNDS 5TH FLOOR
NEW YORK NY 10281-1003
|
5.52%
|
—
|
—
|
24.16%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
PO BOX 2052
JERSEY CITY NJ 07303-2052
|
—
|
—
|
—
|
23.80%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE A/C
ATTN COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
|
—
|
6.67%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
SAMMONS FINANCIAL NETWORK
4546 CORPORATE DR STE 100
WEST DES MOINES IA 50266-5911
|
—
|
—
|
7.77%
|
—
|
—
|
—
|
Invesco Real Estate Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
AMERICAN ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
—
|
—
|
—
|
8.07%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
8.99%
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
CAPITAL BANK & TRUSTCO
TTEE F TRADER JOE S CO
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
—
|
—
|
18.98%
|
—
|
|
|
|
|
|
|
|
|
|
F-9
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1901
|
—
|
—
|
—
|
6.31%
|
11.24%
|
12.99%
|
—
|
|
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
11.15%
|
—
|
—
|
—
|
—
|
—
|
10.51%
|
|
|
|
|
|
|
|
|
|
|
EMPOWER TRUST COMPANY LLC
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
—
|
—
|
—
|
6.57%
|
|
|
|
|
|
|
|
|
|
|
EMPOWER TRUST COMPANY LLC
EMPOWER BENEFIT GRAND FATHERED PL
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
5.07%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
—
|
—
|
6.47%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
MASSACHUSETTS MUTUAL LIFE INSURANCE
1295 STATE STREET MIP M200-INVST
SPRINGFIELD MA 01111-0001
|
—
|
—
|
8.53%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
MASSACHUSETTS MUTUAL LIFE INSURANCE
401K
MASSACHUSETTS MUTUAL LIFE INSURANCE
TTEE FBO
1295 STATE STREET MIP M200-INVST
SPRINGFIELD MA 01111-0001
|
—
|
—
|
—
|
10.70%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
MATRIX TRUSTCO CUST FBO
SANSUM SANTA BARBARA MEDICAL CLINIC
PO BOX 52129
PHOENIX AZ 85072-2129
|
—
|
—
|
—
|
—
|
5.40%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
MERRILL LYNCH PIERCE FENNER & SMITH
FBO THE SOLE BENEFIT OF CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR EAST 2ND FLOOR
JACKSONVILLE FL 32246-6484
|
—
|
—
|
—
|
—
|
—
|
—
|
5.22%
|
|
|
|
|
|
|
|
|
|
|
MORGAN STANLEY SMITH BARNEY LLC
FOR EXCLUSIVE BENEFIT OF CUSTOMERS
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1965
|
—
|
—
|
—
|
10.38%
|
11.36%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
5.37%
|
—
|
—
|
17.63%
|
7.54%
|
14.32%
|
32.90%
|
|
|
|
|
|
|
|
|
|
F-10
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Investor Class
|
Class R5
|
Class R6
|
|
RELIANCE TRUST COMPANY FBO
T ROWE PRICE RETIREMENT
PLAN CLIENTS
PO BOX 78446
ATLANTA GEORGIA 30357
|
—
|
—
|
—
|
—
|
—
|
11.09%
|
—
|
|
|
|
|
|
|
|
|
|
|
TALCOTT RESOLUTION LIFE INS CO
SEPARATE ACCOUNT 401K
PO BOX 5051
HARTFORD CT 06102-5051
|
—
|
—
|
25.65%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
UBS WM USA
OMNI ACCOUNT M/F
ATTN DEPARTMENT MANAGER
SPEC CDY A/C EXCL BEN CUST UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
—
|
—
|
—
|
5.09%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
VOYA INSTITUTIONAL TRUST CO
ATTN FUND OPERATIONS
1 ORANGE WAY
WINDSOR CT 06095-4773
|
—
|
—
|
14.18%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
VRSCO
FBO VTC CUST TTEE FBO
RET PLANS
2929 ALLEN PARKWAY A6-20
HOUSTON TX 77019-7100
|
—
|
—
|
—
|
—
|
—
|
7.50%
|
—
|
Invesco Short Duration Inflation Protected Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||
|
|
Class A
|
Class A2
|
Class Y
|
Class R5
|
Class R6
|
|
AMERICAN ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
—
|
—
|
17.10%
|
—
|
—
|
|
|
|
|
|
|
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
12.36%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1901
|
—
|
7.30%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
32.68%
|
—
|
—
|
—
|
9.16%
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
—
|
12.94%
|
—
|
—
|
|
|
|
|
|
|
|
F-11
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||
|
|
Class A
|
Class A2
|
Class Y
|
Class R5
|
Class R6
|
|
MAC & CO ACCT
MUTUAL FUND OPERATIONS
525 WILLIAM PENN PLACE
PO BOX 3198
PITTSBURGH PA 15230-3198
|
—
|
—
|
—
|
—
|
90.50%
|
|
|
|
|
|
|
|
|
MERRILL LYNCH PIERCE FENNER & SMITH
FBO THE SOLE BENEFIT OF CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR EAST 2ND FLOOR
JACKSONVILLE FL 32246-6484
|
—
|
9.92%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
MUIR & CO 3
C/O FROST BANK TRUST DEPT
P O BOX 2950
SAN ANTONIO TX 78299-2950
|
—
|
—
|
—
|
9.48%
|
—
|
|
|
|
|
|
|
|
|
MUIR & CO
C/O FROST BANK TRUST DEPT
P O BOX 2950
SAN ANTONIO TX 78299-2950
|
—
|
—
|
—
|
62.73%
|
—
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
5.34%
|
6.85%
|
27.19%
|
—
|
—
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
|
—
|
7.03%
|
11.09%
|
—
|
—
|
|
|
|
|
|
|
|
|
TIAA TRUST, N.A. AS CUST/TTEE
OF RETIREMENT PLANS
RECORDKEPT BY TIAA
ATTN: FUND OPERATIONS
8500 ANDREW CARNEGIE BLVD
CHARLOTTE NC 28262-8500
|
—
|
—
|
—
|
14.23%
|
—
|
|
|
|
|
|
|
|
|
WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
—
|
—
|
19.58%
|
—
|
—
|
Invesco Short Term Bond Fund
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
AMERICAN ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
—
|
10.48%
|
—
|
12.86%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
CAPITAL BANK & TRUSTCO
TTEE F HARPER CONSTRUCTION CO
INC 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
—
|
—
|
—
|
—
|
36.26%
|
—
|
|
|
|
|
|
|
|
|
F-12
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
|||||
|
|
Class A
|
Class C
|
Class R
|
Class Y
|
Class R5
|
Class R6
|
|
EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
|
39.66%
|
18.66%
|
—
|
—
|
—
|
37.53%
|
|
|
|
|
|
|
|
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
6.35%
|
—
|
9.03%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
MAC & CO ACCT
MUTUAL FUND OPERATIONS
525 WILLIAM PENN PLACE
PO BOX 3198
PITTSBURGH PA 15230-3198
|
—
|
—
|
—
|
—
|
—
|
50.00%
|
|
|
|
|
|
|
|
|
|
MERRILL LYNCH PIERCE FENNER & SMITH
FBO THE SOLE BENEFIT OF CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR EAST 2ND FLOOR
JACKSONVILLE FL 32246-6484
|
—
|
—
|
—
|
10.96%
|
42.21%
|
—
|
|
|
|
|
|
|
|
|
|
MORGAN STANLEY SMITH BARNEY LLC
FOR EXCLUSIVE BENEFIT OF CUSTOMERS
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1965
|
—
|
—
|
—
|
21.56%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONAL FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
499 WASHINGTON BLVD FL 5
JERSEY CITY NJ 07310
|
5.08%
|
—
|
—
|
9.84%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
NATIONWIDE TRUST COMPANY FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
|
—
|
—
|
—
|
—
|
17.81%
|
—
|
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
|
—
|
6.15%
|
—
|
12.78%
|
—
|
—
|
|
|
|
|
|
|
|
|
|
WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
—
|
12.51%
|
—
|
7.16%
|
—
|
—
|
Invesco U.S. Government Money Portfolio
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||
|
|
Cash Reserve
|
Class C
|
Class R
|
Class Y
|
Class R6
|
|
BNY MELLON INVESTMENT SERVICING INC
FBO PRIMERICA FINANCIAL SERVICES
760 MOORE RD
KING OF PRUSSIA PA 19406-1212
|
6.90%
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
F-13
|
Name and Address
of Principal Holder
|
Percentage Owned of Record
|
||||
|
|
Cash Reserve
|
Class C
|
Class R
|
Class Y
|
Class R6
|
|
LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN: MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
|
—
|
5.58%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
MID ATLANTIC TRUSTCO FBO
MATC OMNIBUS DIV REINVEST LTCG RE
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH PA 15222-4228
|
—
|
—
|
—
|
—
|
99.26%
|
|
|
|
|
|
|
|
|
NOBLE SALES ASSOCIATES 401K
GLEN A NOBLE
PLYMOUTH MI
|
—
|
6.37%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
PERSHING LLC
1 PERSHING PLAZA
JERSEY CITY NJ 07399-0001
|
—
|
6.70%
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
THOMAS GIRARD &
DARIA GIRARD
VILLAS NJ
|
—
|
7.36%
|
—
|
—
|
—
|
*Owned beneficially and of record
Management Ownership
As of June 3, 2024, the trustees and officers as a group owned less than 1% of the outstanding shares
of each class of each Fund.
F-14
APPENDIX G - MANAGEMENT FEES
For the last three fiscal years or periods, as applicable, ended February 28 or 29,
the management fees payable by each Fund, the amounts waived by Invesco and the net fees paid by each
Fund were as follows:
|
|
2024
|
2023
|
2022
|
||||||
|
|
Management
Fee Payable
|
Amounts
Waived
and/or
Reimbursed
that Reduced
the
Management
Fee
|
Net
Management
Fee Paid
|
Management
Fee Payable
|
Amounts
Waived
and/or
Reimbursed
that Reduced
the
Management
Fee
|
Net
Management
Fee Paid
|
Management
Fee Payable
|
Amounts
Waived
and/or
Reimbursed
that Reduced
the
Management
Fee
|
Net
Management
Fee Paid
|
|
Invesco Corporate
Bond Fund
|
$8,073,034
|
$(54,234)
|
$8,018,800
|
$7,443,820
|
$(37,601)
|
$7,406,219
|
$8,200,798
|
$(42,278)
|
$8,158,520
|
|
Invesco Global Real
Estate Fund
|
1,311,497
|
(2,373)
|
1,309,124
|
2,037,138
|
(2,946)
|
2,034,192
|
3,877,190
|
(807)
|
3,876,383
|
|
Invesco Government
Money Market Fund
|
7,360,720
|
-
|
7,360,720
|
5,260,942
|
(157,402)
|
5,103,540
|
4,776,586
|
-
|
4,776,586
|
|
Invesco High Yield
Fund
|
5,544,879
|
(21,724)
|
5,523,155
|
4,386,169
|
(20,706)
|
4,365,463
|
5,093,370
|
(9,065)
|
5,084,305
|
|
Invesco Income Fund
|
1,632,089
|
(16,392)
|
1,615,697
|
1,862,675
|
(25,003)
|
1,837,672
|
2,424,685
|
(418)
|
2,424,267
|
|
Invesco Intermediate
Bond Factor Fund
|
492,021
|
(492,021)
|
-
|
487,234
|
(487,234)
|
-
|
493,512
|
(363,676)
|
129,836
|
|
Invesco Real Estate
Fund
|
9,097,479
|
(17,117)
|
9,080,362
|
12,181,785
|
(15,650)
|
12,166,135
|
14,955,326
|
(5,031)
|
14,950,295
|
|
Invesco Short Duration
Inflation Protected
Fund
|
1,057,091
|
(400,054)
|
657,037
|
1,296,848
|
(294,805)
|
1,002,043
|
1,121,841
|
(111,654)
|
1,010,187
|
|
Invesco Short Term
Bond Fund
|
6,908,735
|
(8,272)
|
6,900,463
|
7,867,376
|
(16,428)
|
7,850,948
|
9,469,177
|
(36,041)
|
9,433,136
|
|
Invesco U.S.
Government Money
Portfolio
|
5,237,304
|
(1,222,246)
|
4,015,058
|
5,490,066
|
(1,859,688)
|
3,630,378
|
5,859,859
|
(5,859,859)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G-1
APPENDIX H - PORTFOLIO MANAGER(S)
Portfolio Manager Fund Holdings and Information on Other Managed Accounts
Invesco’s portfolio managers develop investment models which are used in connection with the management of certain Invesco Funds as well as other mutual funds for which Invesco
or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds,
and other accounts managed for organizations and individuals. The ‘Investments’ chart reflects the portfolio managers' investments in the Fund(s) that they manage and includes investments in the Fund’s shares beneficially owned by a portfolio manager, as determined in accordance with Rule 16a-1(a)(2) under
the Exchange Act (beneficial ownership includes ownership by a portfolio manager’s immediate family members sharing the same household). The ‘Assets Managed’ chart reflects information regarding accounts other than the Fund for which each portfolio manager has day-to-day management responsibilities. Accounts
are grouped into three categories: (i) other registered investment companies; (ii) other pooled investment
vehicles; and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based
on account performance (performance-based fees), information on those accounts is specifically noted. In
addition, any assets denominated in foreign currencies have been converted into U.S. dollars using the
exchange rates as of the applicable date.
Investments
The following information is as of February 29, 2024 (unless otherwise noted):
H-1
|
Fund
|
Portfolio Managers
|
Dollar Range of Investments
in the Fund
|
|
|
James Cowen1
|
None
|
|
|
Grant Jackson
|
$10,001–$50,0002
|
|
|
Darin Turner
|
$100,001–$500,0002
|
|
|
Ping-Ying Wang
|
$10,001–$50,0002
|
|
|
|
|
|
Invesco Short Duration Inflation Protected Fund
|
||
|
|
Robert Young
|
None
|
|
|
|
|
|
Invesco Short Term Bond Fund
|
||
|
|
Matthew Brill
|
$100,001–$500,000
|
|
|
Chuck Burge
|
None
|
|
|
Michael Hyman
|
$100,001–$500,000
|
|
|
Todd Schomberg
|
$50,001–$100,000
|
|
|
|
|
1 The Portfolio Manager is not domiciled in the United States. Accordingly, the Portfolio
Manager may not invest in the Fund.
2 Includes investments in a Patterned Fund, an Invesco Fund with the same or similar
objectives and strategies as the Fund, as of the most recent fiscal year end of the Fund.
Assets Managed
The following information is as of February 29, 2024 (unless otherwise noted):
H-2
|
Portfolio Managers
|
Other Registered
Investment Companies
Managed
|
Other Pooled
Investment Vehicles
Managed
|
Other
Accounts
Managed
|
|||
|
|
|
|
|
|
|
|
|
Invesco Real Estate Fund
|
||||||
|
James Cowen
|
7
|
$1,214.0
|
7
|
$3,284.5
|
234
|
$2,709.24
|
|
Grant Jackson
|
8
|
$1,287.3
|
7
|
$3,284.5
|
234
|
$2,709.24
|
|
Darin Turner
|
8
|
$1,287.3
|
7
|
$3,284.5
|
234
|
$2,709.24
|
|
Ping-Ying Wang
|
8
|
$1,287.3
|
7
|
$3,284.5
|
234
|
$2,709.24
|
|
Invesco Short Duration Inflation Protected Fund
|
||||||
|
Robert Young
|
3
|
$1,475.3
|
1
|
$20.7
|
None
|
None
|
|
|
|
|
|
|
|
|
|
Invesco Short Term Bond Fund
|
||||||
|
Matthew Brill
|
8
|
$11,482.1
|
19
|
$ 5,249.4
|
73
|
$ 694.93
|
|
Chuck Burge
|
10
|
$24,023.5
|
8
|
$ 7,243.8
|
73
|
$ 621.63
|
|
Michael Hyman
|
9
|
$11,672.2
|
22
|
$ 5,185.6
|
63
|
$ 533.93
|
|
Todd Schomberg
|
7
|
$10,271.5
|
21
|
$ 5,330.5
|
63
|
$ 533.93
|
|
|
|
|
|
|
|
|
|
3 These are accounts of individual investors for which Invesco provides investment
advice. Invesco offers separately managed
accounts that are managed according to the investment models developed by its portfolio
managers and used in connection with
the management of certain Invesco Funds. These accounts may be invested in accordance
with one or more of those
investment models and investments held in those accounts are traded in accordance
with the applicable models.
4 This amount includes 1 fund that pay performance-based fees with $87.8 M in total
assets under management.
|
||||||
Potential Conflicts of Interest
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day
management responsibilities with respect to more than one Fund or other account. More specifically,
portfolio managers who manage multiple Funds and/or other accounts may be presented with one or more
of the following potential conflicts:
●
The management of multiple Funds and/or other accounts may result in a portfolio manager
devoting unequal time and attention to the management of each Fund and/or other account. The
Adviser and each Sub-Adviser seek to manage such competing interests for the time and attention
of portfolio managers by having portfolio managers focus on a particular investment discipline.
Most other accounts managed by a portfolio manager are managed using the same investment models
that are used in connection with the management of the Funds.
●
If a portfolio manager identifies a limited investment opportunity which may be suitable
for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity
due to an allocation of filled purchase or sale orders across all eligible Funds and other
accounts. To deal with these situations, the Adviser, each Sub-Adviser and the Funds have adopted procedures
for allocating portfolio transactions across multiple accounts.
●
The Adviser and each Sub-Adviser determine which broker to use to execute each order
for securities transactions for the Funds, consistent with its duty to seek best execution
of the transaction. However, for certain other accounts (such as mutual funds for which Invesco
or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered
mutual funds, and other accounts managed for organizations and individuals), the Adviser and each
Sub-Adviser may be limited by the client with respect to the selection of brokers or may be instructed
to direct trades through a particular broker. In these cases, trades for a Fund in a particular
security may be placed separately from, rather than aggregated with, such other accounts. Having separate
transactions with respect to a security may temporarily affect the market price of
the security or the execution of the transaction, or both, to the possible detriment of the Fund or other
account(s) involved.
●
The appearance of a conflict of interest may arise where the Adviser or Sub-Adviser
has an incentive, such as a performance-based management fee, which relates to the management
of one
H-3
Fund or account but not all Funds and accounts for which a portfolio manager has day-to-day
management responsibilities.
●
In the case of a fund-of-funds arrangement, including where a portfolio manager manages
both the investing Fund and an affiliated underlying fund in which the investing Fund invests
or may invest, a conflict of interest may arise if the portfolio manager of the investing Fund receives
material nonpublic information about the underlying fund. For example, such a conflict may
restrict the ability of the portfolio manager to buy or sell securities of the underlying Fund, potentially
for a prolonged period of time, which may adversely affect the Fund.
The Adviser, each Sub-Adviser, and the Funds have adopted certain compliance procedures
which are designed to address these types of conflicts. However, there is no guarantee that
such procedures will detect each and every situation in which a conflict arises.
Description of Compensation Structure
For the Adviser and each Sub-Adviser
The Adviser and each Sub-Adviser seek to maintain a compensation program that is competitively
positioned to attract and retain high-caliber investment professionals. Portfolio
managers receive a base salary, an incentive cash bonus opportunity and a deferred compensation opportunity.
Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes
in the market, as well as to adjust the factors used to determine bonuses to promote competitive Fund
performance. The Adviser and each Sub-Adviser evaluate competitive market compensation by reviewing
compensation survey results conducted by an independent third party of investment industry compensation.
Each portfolio manager's compensation consists of the following three elements:
Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Adviser
and each Sub-Adviser’s intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
Annual Bonus. The portfolio managers are eligible, along with other employees of the Adviser and
each Sub-Adviser, to participate in a discretionary year-end bonus pool. The Compensation
Committee of Invesco Ltd. reviews and approves the firm-wide bonus pool based upon progress against strategic
objectives and annual operating plan, including investment performance and financial results. In
addition, while having no direct impact on individual bonuses, assets under management are considered when determining
the starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash
bonus which is based on quantitative (i.e. investment performance) and non-quantitative factors (which may
include, but are not limited to, individual performance, risk management and teamwork).
Each portfolio manager's compensation is linked to the pre-tax investment performance
of the Funds/accounts managed by the portfolio manager as described in Table 1 below.
|
Sub-Adviser
|
Performance time period5
|
|
Invesco6
|
One-, Three- and Five-year performance against Fund peer group
|
|
Invesco Canada6
|
|
|
Invesco Deutschland6
|
|
|
Invesco Hong Kong6
|
|
|
Invesco Asset Management6
|
|
|
Invesco India6
|
|
|
Invesco Listed Real Assets Division6
|
|
|
|
|
|
Invesco Senior Secured6, 7
|
Not applicable
|
|
Invesco Capital6, 8
|
|
|
|
|
H-4
|
Sub-Adviser
|
Performance time period5
|
|
Invesco Japan
|
One-, Three- and Five-year performance
|
|
|
|
|
5 Rolling time periods based on calendar year-end.
|
|
|
6 Portfolio Managers may be granted an annual deferral award that vests on a pro-rata
basis over a four-year period.
|
|
|
7 Invesco Senior Secured’s bonus is based on annual measures of equity return and standard tests of collateralization performance.
|
|
|
8 Portfolio Managers for Invesco Capital base their bonus on Invesco results as well
as overall performance of Invesco Capital.
|
|
High investment performance (against applicable peer group and/or benchmarks) would
deliver compensation generally associated with top pay in the industry (determined by reference
to the third-party provided compensation survey information) and poor investment performance (versus
applicable peer group) would result in low bonus compared to the applicable peer group or no bonus at all.
These decisions are reviewed and approved collectively by senior leadership which has responsibility for
executing the compensation approach across the organization.
With respect to Invesco Capital, there is no policy regarding, or agreement with,
the Portfolio Managers or any other senior executive of the Adviser to receive bonuses or any other compensation
in connection with the performance of any of the accounts managed by the Portfolio Managers.
Deferred / Long Term Compensation. Portfolio managers may be granted a deferred compensation award based on a firm-wide bonus pool approved by the Compensation Committee of Invesco
Ltd. Deferred compensation awards may take the form of annual fund deferral awards or long-term equity awards. Annual fund deferral awards are notionally invested in certain Invesco funds selected by the Portfolio Manager and are settled in cash. Long-term equity awards are settled in Invesco Ltd. common shares.
Both fund deferral awards and long-term equity awards have a four-year ratable vesting schedule. The
vesting period aligns the interests of the Portfolio Managers with the long-term interests of clients and shareholders
and encourages retention.
Retirement and health and welfare arrangements. Portfolio managers are eligible to participate in retirement and health and welfare plans and programs that are available generally
to all employees.
H-5
APPENDIX I - ADMINISTRATIVE SERVICES FEES
The Funds paid Invesco the following amounts for administrative services for the last
three fiscal years or periods, as applicable, ended February 28 or 29.
|
Fund Name
|
2024
|
2023
|
2022
|
|
Invesco Corporate Bond Fund
|
$392,148
|
$358,322
|
$400,269
|
|
Invesco Global Real Estate Fund
|
24,690
|
39,242
|
72,046
|
|
Invesco Government Money Market Fund
|
2,161,640
|
1,555,471
|
1,396,743
|
|
Invesco High Yield Fund
|
145,640
|
114,585
|
129,450
|
|
Invesco Income Fund
|
50,699
|
59,935
|
84,233
|
|
Invesco Intermediate Bond Factor Fund
|
26,800
|
28,574
|
27,338
|
|
Invesco Real Estate Fund
|
178,215
|
242,314
|
281,604
|
|
Invesco Short Duration Inflation Protected Fund
|
75,821
|
97,508
|
80,568
|
|
Invesco Short Term Bond Fund
|
307,020
|
362,056
|
433,323
|
|
Invesco U.S. Government Money Portfolio
|
558,924
|
589,714
|
625,236
|
I-1
APPENDIX J - BROKERAGE COMMISSIONS AND COMMISSIONS ON AFFILIATED TRANSACTIONS
Set forth below are brokerage commissions paid by the Funds during the last three
fiscal years or periods, as applicable, ended February 28 or 29. Unless otherwise indicated, the amount
of the brokerage commissions paid by a Fund may change from year to year because of, among other things,
changing asset levels, shareholder activity, and/or portfolio turnover.
|
|
Total $ Amount
of Brokerage
Commissions Paid1
|
Total $ Amount
of Brokerage
Commissions
Paid to
Affiliated
Brokers
|
% of Total
Brokerage
Commissions
Paid to the
Affiliated
Brokers
|
% of Total
Transaction
Dollars
Effected
Through
Affiliated
Brokers
|
||||
|
|
2024
|
2023
|
2022
|
2024
|
2023
|
2022
|
2024
|
2024
|
|
Invesco Corporate Bond Fund
|
$166,513
|
$184,582
|
$196,339
|
$0
|
$0
|
$0
|
0%
|
0%
|
|
Invesco Global Real Estate Fund2
|
258,535
|
343,437
|
621,382
|
0
|
0
|
0
|
0
|
0
|
|
Invesco Government Money Market Fund
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Invesco High Yield Fund
|
141,337
|
155,075
|
172,489
|
0
|
0
|
0
|
0
|
0
|
|
Invesco Income Fund2
|
15,962
|
8,658
|
17,004
|
0
|
0
|
0
|
0
|
0
|
|
Invesco Intermediate Bond Factor Fund3
|
5,584
|
7,997
|
1,576*
|
0
|
0
|
0
|
0
|
0
|
|
Invesco Real Estate Fund2
|
776,550
|
580,334
|
703,877
|
3,179
|
0
|
0
|
0.41%
|
0.28%
|
|
Invesco Short Duration Inflation Protected Fund
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Invesco Short Term Bond Fund4
|
207,200
|
186,208
|
57,363
|
0
|
0
|
0
|
0
|
0
|
|
Invesco U.S. Government Money Portfolio
|
0
|
0
|
0*
|
0
|
0
|
0
|
0
|
0
|
1 Disclosure regarding brokerage commissions is limited to commissions paid on agency
trades and designated as such on the trade confirm.
2 The variation in brokerage commissions paid by the Fund is attributable to changing asset levels.
3 The variation in brokerage commissions paid by the Fund is attributable to changing asset levels, shareholder activity and portfolio turnover.
4 The variation in brokerage commissions paid by the Fund is attributable to portfolio turnover.
*Amounts to not include spreads or commissions on principal transactions on a net trade basis.
2 The variation in brokerage commissions paid by the Fund is attributable to changing asset levels.
3 The variation in brokerage commissions paid by the Fund is attributable to changing asset levels, shareholder activity and portfolio turnover.
4 The variation in brokerage commissions paid by the Fund is attributable to portfolio turnover.
*Amounts to not include spreads or commissions on principal transactions on a net trade basis.
J-1
APPENDIX K - RESEARCH SERVICES AND PURCHASES OF SECURITIES
OF REGULAR BROKERS OR DEALERS
OF REGULAR BROKERS OR DEALERS
RESEARCH SERVICES
The following table shows the dollar amount of brokerage commissions paid to brokers
for providing Section 28(e) research/brokerage services under Section 28(e) of the Exchange Act, and the approximate dollar amount of the transactions involved for the fiscal year ended February 29, 2024. The provision of Section 28(e) research/brokerage services was not necessarily a factor in the placement of all brokerage business with such brokers.
|
Fund
|
Amount of Brokerage Transactions Involved1
|
Amount of Commissions Paid to Brokers for Providing 28(e) Eligible Research Services1
|
|
Invesco Global Real Estate Fund
|
$233,906,348
|
$233,156
|
|
Invesco Real Estate Fund
|
1,154,493,066
|
676,852
|
1 Amounts reported are inclusive of commissions paid to, and brokerage transactions
placed with, certain brokers that provide execution, research and other services.
REGULAR BROKER-DEALERS
During the last fiscal year ended February 29, 2024, the following Funds purchased securities issued by the following companies, which are "regular" brokers or dealers of the Funds identified
below.
|
Fund
|
Security
|
Market Value
(as of February 29, 2024)
|
|
Invesco Corporate Bond Fund
|
Bank of America Corp (Debt)
|
$43,684,456
|
|
|
Bank of America Corp (Equity)
|
$32,602,739
|
|
|
Goldman Sachs Group, Inc. (The) (Debt)
|
$33,545,649
|
|
|
Goldman Sachs Group, Inc. (The) (Equity)
|
$3,131,326
|
|
|
Morgan Stanley (Debt)
|
$43,834,569
|
|
|
Morgan Stanley (Equity)
|
$10,345,434
|
|
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K-1
APPENDIX L - PURCHASE, REDEMPTION, EXCHANGE AND PRICING OF SHARES
All references in the following "Purchase, Redemption and Pricing of Shares" section
of this SAI to Class A, C and R shares shall include Class A2 and AX (except Invesco Government Money Market
Fund) and Class CX shares, respectively, unless otherwise noted. All references in the following
"Purchase, Redemption and Pricing of Shares" section of this SAI to Invesco Cash Reserve Shares of Invesco
Government Money Market Fund shall include Class AX shares of Invesco Government Money Market Fund,
unless otherwise noted. The information contained in this section of the SAI does not apply to Invesco
SMA High Yield Bond Fund and Invesco SMA Municipal Bond Fund. For more information regarding those funds,
please see their SAIs.
Transactions through Financial Intermediaries
If you are investing indirectly in an Invesco Fund through a financial intermediary
such as a broker-dealer, a bank (including a bank trust department), an insurance company separate account,
an investment adviser, an administrator or trustee of a Retirement and Benefit Plan or a qualified tuition
plan or a sponsor of a fee-based program that maintains a master account (an omnibus account) with the Invesco Fund
for trading on behalf of its customers, different guidelines, conditions and restrictions may apply
than if you held your shares of the Invesco Fund directly. These differences may include, but are not limited to:
(i) different eligibility standards to purchase and sell shares, different eligibility standards to invest in
Funds with limited offering status and different eligibility standards to exchange shares by telephone; (ii) different
minimum and maximum initial and subsequent purchase amounts; (iii) system inability to provide
Letter of Intent privileges; and (iv) different annual amounts (less than 12%) subject to withdrawal under a Systematic
Redemption Plan without being subject to a contingent deferred sales charge (CDSC). The financial
intermediary through whom you are investing may also choose to adopt different exchange and/or transfer limit
guidelines and restrictions, including different trading restrictions designed to discourage excessive
or short-term trading.
If the financial intermediary is managing your account, you may also be charged a
transaction or other fee by such financial intermediary, including service fees for handling redemption transactions.
Consult with your financial intermediary (or, in the case of a Retirement and Benefit Plan, your plan
sponsor) to determine what fees, guidelines, conditions and restrictions, including any of the above, may be
applicable to you.
Unless otherwise provided, the following are certain defined terms used throughout
this prospectus:
●
Employer Sponsored Retirement and Benefit Plans include (i) employer sponsored pension
or profit sharing plans that qualify under Section 401(a) of the Internal Revenue Code of 1986,
as amended (the Code), including 401(k), money purchase pension, profit sharing and defined benefit
plans; (ii) 403(b) and non-qualified deferred compensation arrangements that operate similar to
plans described under (i) above, such as 457 plans and executive deferred compensation arrangements;
(iii) health savings accounts maintained pursuant to Section 223 of the Code; and
(iv) voluntary employees' beneficiary arrangements maintained pursuant to Section 501(c)(9) of the
Code.
●
Individual Retirement Accounts (IRAs) include Traditional and Roth IRAs.
●
Employer Sponsored IRAs include Simplified Employee Pension (SEP), Salary Reduction
Simplified Employee Pension (SAR-SEP), and Savings Incentive Match Plan for Employees of Small
Employers (SIMPLE) IRAs.
●
Retirement and Benefit Plans include Employer Sponsored Retirement and Benefit Plans,
IRAs and Employer Sponsored IRAs.
Purchase and Redemption of Shares
Purchases of Class A shares, Class A2 shares of Invesco Short Duration Inflation Protected
Fund and Invesco Limited Term Municipal Income Fund, Class AX shares of Invesco Government
Money Market Fund and Invesco Cash Reserve Shares of Invesco Government Money Market Fund and Invesco
U.S. Government Money Portfolio
L-1
Initial Sales Charges. Each Invesco Fund (other than Invesco Conservative Income Fund and Invesco Short Term Municipal Fund) is grouped into one of six categories to determine the
applicable initial sales charge for its Class A shares. The sales charge is used to compensate Invesco Distributors,
Inc. (Invesco Distributors) and participating dealers for their expenses incurred in connection
with the distribution of the Invesco Funds' shares. You may also be charged a transaction or other fee by the financial
intermediary managing your account.
Class A shares of Invesco Conservative Income Fund and Invesco Short Term Municipal
Fund; Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio; and Class A shares
and Invesco Cash Reserve Shares of Invesco Government Money Market Fund, are sold without an initial
sales charge.
Category I Funds
Invesco Advantage International Fund
Invesco American Franchise Fund
Invesco Balanced-Risk Allocation Fund
Invesco Balanced-Risk Commodity Strategy Fund
Invesco Capital Appreciation Fund
Invesco Charter Fund
Invesco Comstock Fund
Invesco Comstock Select Fund
Invesco Convertible Securities Fund
Invesco Developing Markets Fund
Invesco Discovery Fund
Invesco Discovery Mid Cap Growth Fund
Invesco Diversified Dividend Fund
Invesco Dividend Income Fund
Invesco Energy Fund
Invesco Equally-Weighted S&P 500 Fund
Invesco Equity and Income Fund
Invesco EQV Asia Pacific Equity Fund
Invesco EQV Emerging Markets All Cap Fund
Invesco EQV European Equity Fund
Invesco EQV European Small Company Fund
Invesco EQV International Equity Fund
Invesco EQV International Small Company Fund
Invesco Fundamental Alternatives Fund
Invesco Global Allocation Fund
Invesco Global Core Equity Fund
Invesco Global Focus Fund
Invesco Global Fund
Invesco Global Infrastructure Fund
Invesco Global Opportunities Fund
Invesco Global Real Estate Fund
Invesco Global Real Estate Income Fund
Invesco Gold & Special Minerals Fund
Invesco Greater China Fund
Invesco Growth and Income Fund
Invesco Health Care Fund
Invesco Income Advantage International Fund
Invesco Income Advantage U.S. Fund
Invesco International Diversified Fund
Invesco International Small-Mid Company Fund
Invesco Macro Allocation Strategy Fund
Invesco Main Street All Cap Fund
Invesco Main Street Fund
Invesco Main Street Mid-Cap Fund
Invesco Main Street Small Cap Fund
Invesco MSCI World SRI Index Fund
Invesco Multi-Asset Income Fund
Invesco Oppenheimer International Growth Fund
Invesco Real Estate Fund
Invesco Rising Dividends Fund
Invesco S&P 500 Index Fund
Invesco Small Cap Equity Fund
Invesco Small Cap Growth Fund
Invesco Small Cap Value Fund
Invesco SteelPath MLP Alpha Fund
Invesco Steelpath MLP Alpha Plus Fund
Invesco SteelPath MLP Income Fund
Invesco SteelPath MLP Select 40 Fund
Invesco Summit Fund
Invesco Technology Fund
Invesco Value Opportunities Fund
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $50,000
|
5.50%
|
5.82%
|
5.00%
|
|
$50,000 but less than $100,000
|
4.50%
|
4.71%
|
4.00%
|
|
$100,000 but less than $250,000
|
3.50%
|
3.63%
|
3.00%
|
|
$250,000 but less than $500,000
|
2.75%
|
2.83%
|
2.25%
|
|
$500,000 but less than $1,000,000
|
2.00%
|
2.04%
|
1.75%
|
Category II Funds
Invesco AMT-Free Municipal Income Fund
Invesco California Municipal Fund
Invesco Core Bond Fund
Invesco Core Plus Bond Fund
Invesco Corporate Bond Fund
Invesco Emerging Markets Local Debt Fund
Invesco Environmental Focus Municipal Fund
Invesco Global Strategic Income Fund
L-2
Invesco High Yield Fund
Invesco High Yield Municipal Fund
Invesco Income Fund
Invesco Intermediate Bond Factor Fund
Invesco International Bond Fund
Invesco Municipal Income Fund
Invesco New Jersey Municipal Fund
Invesco Pennsylvania Municipal Fund
Invesco Quality Income Fund
Invesco Rochester AMT-Free New York Municipal Fund
Invesco Rochester Municipal Opportunities Fund
Invesco Rochester New York Municipals Fund
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $100,000
|
4.25%
|
4.44%
|
4.00%
|
|
$100,000 but less than $250,000
|
3.50%
|
3.63%
|
3.25%
|
|
$250,000 but less than $500,000
|
2.50%
|
2.56%
|
2.25%
|
|
$500,000 but less than $1,000,000
|
2.00%
|
2.04%
|
1.75%
|
Category III Funds
Invesco Limited Term Municipal Income Fund (Class A2 shares)
Invesco Short Duration Inflation Protected Fund (Class A2 shares)
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $100,000
|
1.00%
|
1.01%
|
0.75%
|
|
$100,000 but less than $250,000
|
0.75%
|
0.76%
|
0.50%
|
|
$250,000 but less than $1,000,000
|
0.50%
|
0.50%
|
0.40%
|
As of the close of business on October 30, 2002, Class A2 shares of Invesco Short
Duration Inflation Protected Fund and Invesco Limited Term Municipal Income Fund were closed to new investors.
Current investors must maintain a share balance in order to continue to make incremental purchases.
Category IV Funds
Invesco Floating Rate ESG Fund
Invesco Intermediate Term Municipal Income Fund
Invesco Limited Term California Municipal Fund
Invesco Limited Term Municipal Income Fund (Class A shares)
Invesco Rochester Limited Term New York Municipal Fund
Invesco Short Duration High Yield Municipal Fund
Invesco Short Duration Inflation Protected Fund (Class A shares)
Invesco Short Term Bond Fund
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $100,000
|
2.50%
|
2.56%
|
2.00%
|
|
$100,000 but less than $250,000
|
1.75%
|
1.78%
|
1.50%
|
L-3
Category V Funds
Invesco Senior Floating Rate Fund
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $100,000
|
3.25%
|
3.36%
|
3.00%
|
|
$100,000 but less than $250,000
|
2.75%
|
2.83%
|
2.50%
|
|
$250,000 but less than $500,000
|
1.75%
|
1.78%
|
1.50%
|
|
$500,000 but less than $1,000,000
|
1.50%
|
1.52%
|
1.25%
|
Category VI Funds
Invesco Active Allocation Fund
Invesco Income Allocation Fund
Invesco Select Risk: Conservative Investor Fund
Invesco Select Risk: Growth Investor Fund
Invesco Select Risk: High Growth Investor Fund
Invesco Select Risk: Moderate Investor Fund
Invesco Select Risk: Moderately Conservative Investor Fund
|
Amount of Investment
|
Investor’s Sales Charge
|
Dealer Concession
|
|
|
|
As a Percentage of the
Public Offering Price
|
As a Percentage of the
Net Amount Invested
|
As a Percentage of the
Net Amount Invested
|
|
Less than $50,000
|
5.50%
|
5.82%
|
5.00%
|
|
$50,000 but less than $100,000
|
4.50%
|
4.71%
|
4.00%
|
|
$100,000 but less than $250,000
|
3.50%
|
3.63%
|
3.00%
|
Large Purchases of Class A Shares. Investors who purchase $1,000,000 or more of Class A shares of Category I, II or V Funds do not pay an initial sales charge. Investors who purchase
$250,000 or more of Class A shares of Category IV or VI Funds do not pay an initial sales charge. In addition,
investors who own Class A shares of Category I, II or V Funds and make additional purchases that result
in account balances of $1,000,000 or more and investors who own Class A shares of Category IV or VI Funds
and make additional purchases that result in account balances of $250,000 or more do not pay an initial
sales charge on the additional purchases. The additional purchases, as well as initial purchases of Class
A shares of $1,000,000 or more (for Category I, II and V) or $250,000 or more (for Category IV or VI Funds),
are referred to as Large Purchases. If an investor makes a Large Purchase of Class A shares of a Category I,
II, IV, V or VI Fund, each share will generally be subject to a 1.00% CDSC if the investor redeems those
shares within 18 months after purchase.
Invesco Distributors may pay a dealer concession and/or advance a service fee on Large
Purchases of Class A shares, as set forth below. Exchanges between the Invesco Funds may affect
total compensation paid.
Payments for Purchases of Class A Shares by Investors Other than Employer Sponsored
Retirement and Benefit Plans. Invesco Distributors may make the following payments to dealers of record for Large Purchases of Class A shares of Category I, II, IV, V or VI Funds by investors
other than Employer Sponsored Retirement and Benefit Plans:
Percent of Purchases – Categories I, II, IV, V and VI
●
1% (0.50% for Invesco Short Duration Inflation Protected Fund and 0.75% for Invesco
Limited Term Municipal Income Fund and Invesco Short Term Bond Fund) of the first $4 million
●
plus 0.50% of the next $46 million
●
plus 0.25% of amounts in excess of $50 million
L-4
If (i) the amount of any single purchase order plus (ii) the public offering price
of all other shares owned by the same customer submitting the purchase order on the day on which the purchase order
is received equals or exceeds $1,000,000, with respect to Categories I or II Funds, or $250,000 with
respect to Category IV or VI Funds, the purchase will be considered a "jumbo accumulation purchase." With regard
to any individual jumbo accumulation purchase, Invesco Distributors may make payment to the dealer of record
based on the cumulative total of jumbo accumulation purchases made by the same customer over the
life of his or her account(s).
If an investor made a Large Purchase of Class A shares of Invesco Short Duration Inflation
Protected Fund or Invesco Limited Term Municipal Income Fund on or after October 31, 2002, and
prior to February 1, 2010, and exchanges those shares for Class A shares of a Category I, II, IV, V or
VI Fund, Invesco Distributors will pay 1.00% of such purchase as dealer compensation upon the exchange.
The Class A shares of the Category I, II, IV, V or VI Fund received in exchange generally will be subject
to a 1.00% CDSC if the investor redeems such shares within 18 months from the date of exchange.
Payments for Purchases of Class A Shares at NAV by Employer Sponsored Retirement and
Benefit Plans. Invesco Distributors may make the following payments to dealers of record for purchases
of Class A shares at net asset value (NAV) of Category I, II, IV, V or VI Funds by Employer
Sponsored Retirement and Benefit Plans provided that the applicable dealer of record is able
to establish that the plan's purchase of such Class A shares is a new investment (as defined below):
Percent of Purchases
●
0.50% of the first $20 million
●
plus 0.25% of amounts in excess of $20 million
A "new investment" means a purchase paid for with money that does not represent (i)
the proceeds of one or more redemptions of Invesco Fund shares, (ii) an exchange of Invesco Fund shares,
(iii) the repayment of one or more Employer Sponsored Retirement and Benefit Plan loans that were funded
through the redemption of Invesco Fund shares, or (iv) money returned from another fund family.
If Invesco Distributors pays a dealer concession in connection with an Employer Sponsored Retirement and Benefit
Plan's or SIMPLE IRA Plan's purchase of Class A shares at NAV, such shares may be subject to
a CDSC of 1.00% of net assets for 12 months, commencing on the date the Employer Sponsored Retirement
and Benefit Plan or SIMPLE IRA Plan first invests in Class A shares of an Invesco Fund. If the applicable
dealer of record is unable to establish that an Employer Sponsored Retirement and Benefit Plan's or SIMPLE
IRA Plan's purchase of Class A shares at NAV is a new investment, Invesco Distributors will not
pay a dealer concession in connection with such purchase and such shares will not be subject to a CDSC.
With regard to any individual jumbo accumulation purchase, Invesco Distributors may
make payment to the dealer of record based on the cumulative total of jumbo accumulation purchases
made by the same plan over the life of the plan's account(s).
Fund Reorganizations. Class A Shares issued in connection with a Fund's merger, consolidation, or acquisition of the assets of another Fund will not be charged an initial sales charge.
Purchasers Qualifying For Reductions in Initial Sales Charges. As shown in the tables above, the applicable initial sales charge for the new purchase may be reduced and will be based
on the total of your current purchase and the value of other shares owned based on their current public
offering price. These reductions are available to purchasers that meet the qualifications listed in the
prospectus under "Qualifying for Reduced Sales Charges and Sales Charge Exceptions."
How to Qualify For Reductions in Initial Sales Charges under Rights of Accumulation
(ROAs) or Letters of Intent (LOIs). The following sections discuss different ways that a purchaser can qualify for a
reduction in the initial sales charges for purchases of Class A shares of the Invesco
Funds.
L-5
Letters of Intent
A purchaser may pay reduced initial sales charges by (i) indicating on the Account
Application that he, she or it intends to provide a LOI; and (ii) subsequently fulfilling the conditions of
that LOI.
Purchases of Class A shares of Invesco Conservative Income Fund and Invesco Short
Term Municipal Fund; Invesco Cash Reserve Shares of Invesco U.S. Government Money Portfolio; and
Class A, Class AX or Invesco Cash Reserve Shares of Invesco Government Money Market Fund, as applicable,
or Class IB, IC, Y and Investor Class shares of any Invesco Fund, will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges since they cannot be tied
to a LOI.
The LOI confirms the total investment in shares of the Invesco Funds that the purchaser
intends to make within the next 13 months. By marking the LOI section on the account application and
by signing the account application, the purchaser indicates that he, she or it understands and agrees to
the terms of the LOI and is bound by the provisions described below:
Calculating the Initial Sales Charge
●
Each purchase of Fund shares normally subject to an initial sales charge made during
the 13-month period will be made at the public offering price applicable to a single transaction
of the total dollar amount indicated by the LOI (to determine what the applicable public offering price
is, look at the sales charge table in the section on "Initial Sales Charges" above).
●
It is the purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
●
The offering price may be further reduced as described below under "Rights of Accumulation"
if Invesco Investment Services, Inc., the Invesco Funds' transfer agent (Transfer Agent)
is advised of all other accounts at the time of the investment.
●
Reinvestment of dividends and capital gains distributions acquired during the 13-month
LOI period will not be applied to the LOI.
Calculating the Number of Shares to be Purchased
●
Purchases made and shares acquired through reinvestment of dividends and capital gains
distributions prior to the LOI effective date will be applied toward the completion
of the LOI based on the value of the shares calculated at the public offering price on the effective date
of the LOI.
●
If a purchaser wishes to revise the LOI investment amount upward, he, she or it may
submit a written and signed request at any time prior to the completion of the original LOI.
This revision will not change the original expiration date.
●
The Transfer Agent will process necessary adjustments upon the expiration or completion
date of the LOI.
Fulfilling the Intended Investment
●
By signing a LOI, a purchaser is not making a binding commitment to purchase additional
shares, but if purchases made within the 13-month period do not total the amount specified,
the purchaser generally will have to pay the increased amount of sales charge.
●
To assure compliance with the provisions of the 1940 Act, the Transfer Agent will
reserve, in escrow or similar arrangement, in the form of shares, an appropriate dollar amount computed
to the nearest full share out of the initial purchase (or subsequent purchases if necessary). All
dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser.
All shares purchased, including those reserved, will be registered in the purchaser's name. If
the total investment specified under this LOI is completed within the 13-month period, the reserved
shares will be promptly released, and additional purchases will be subject to the appropriate
breakpoint sales charge based on the account's current ROA value.
L-6
●
If the intended investment is not completed, the purchaser generally will pay the
Transfer Agent the difference between the sales charge on the specified amount and the sales charge on
the total amount actually purchased. If the purchaser does not pay such difference within 20
days of the expiration date, the Transfer Agent will surrender for redemption any or all shares,
to make up such difference within 60 days of the expiration date.
●
Accounts linked under the LOI revert back to ROA once a LOI is met, regardless of
expiration date.
Canceling the LOI
●
If at any time before completing the LOI Program, the purchaser wishes to cancel the
agreement, he or she must give written notice to Invesco Distributors or its designee.
●
If at any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his or her total shares, the LOI will
be automatically canceled. If the total amount purchased is less than the amount specified in the LOI,
the Transfer Agent will redeem an appropriate number of reserved shares equal to the difference
between the sales charge actually paid and the sales charge that would have been paid if the total
purchases had been made at a single time.
Other Persons Eligible for the LOI Privilege
The LOI privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992.
LOIs and Contingent Deferred Sales Charges
All LOIs to purchase $1,000,000 or more of Class A shares of Category I, II or V Funds
or $250,000 or more of Class A shares of Category IV or VI Funds are subject to an 18-month, 1% CDSC.
Rights of Accumulation
A purchaser may also qualify for reduced initial sales charges under Invesco’s ROA policy. To determine whether or not a reduced initial sales charge applies to a proposed purchase, Invesco
Distributors takes into account not only the money that is invested upon such proposed purchase, but also
the value of all shares of the Invesco Funds owned by such purchaser, calculated at their then current public
offering price.
If a purchaser qualifies for a reduced sales charge, the reduced sales charge applies
to the total amount of money being invested, even if only a portion of that amount exceeds the breakpoint
for the reduced sales charge. For example, if a purchaser already owns qualifying shares of any Invesco
Fund with a value of $30,000 and wishes to invest an additional $30,000 in a Fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 4.50% will apply to the full $30,000 purchase
and not just to the $10,000 in excess of the $50,000 breakpoint.
To qualify for obtaining the discount applicable to a particular purchase, the purchaser
or his dealer must furnish the Transfer Agent with a list of the account numbers and the names in which
such accounts of the purchaser are registered at the time the purchase is made.
ROAs are also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
Certain participants utilizing an Invesco 403(b)(7) Custodial Account who were granted
ROA at the plan level prior to December 15, 2023, are also eligible to receive a reduced applicable
initial sales charge pursuant to that plan-level ROA arrangement.
If an investor's new purchase of Class A shares of a Category I, II, IV, V or VI Fund
is at net asset value, the newly purchased shares may be subject to a 1% CDSC if the investor redeems them
prior to the end of the 18 month holding period.
L-7
Other Requirements For Reductions in Initial Sales Charges. As discussed above, investors or dealers seeking to qualify orders for a reduced initial sales charge must identify
such orders and, if necessary, support their qualification for the reduced charge. Invesco Distributors reserves
the right to determine whether any purchaser is entitled to a reduced sales charge based upon the qualifications
set forth in the prospectus under "Qualifying for Reduced Sales Charges and Sales Charge Exceptions."
Class A Shares Sold Without an Initial Sales Charge. Invesco Distributors permits certain other investors to invest in Class A shares without paying an initial sales charge, generally
as a result of the investor's current or former relationship with the Invesco Funds. It is possible that
a financial intermediary may not, in accordance with its policies and procedures, be able to offer one or more
of these waiver categories. If this situation occurs, it is possible that the investor would need to invest directly
through an account without a designated intermediary in order to take advantage of the waiver. The Funds may terminate
or amend the terms of these sales charge waivers at any time.
●
Any current, former or retired trustee, director, officer or employee (or any immediate
family member of a current, former or retired trustee, director, officer or employee) of any Invesco
Fund or of Invesco Ltd. or any of its subsidiaries. This includes any foundation, trust or employee
benefit plan maintained by any such persons;
●
Any current or retired officer, director, or employee (and members of his or her immediate
family) of DST Systems, Inc.;
●
Shareholders who received Class A shares of an Invesco Fund on June 1, 2010 in connection
with the reorganization of a predecessor fund in which such shareholder owned Class H,
Class L, Class P, and/or Class W shares, who purchase additional Class A shares of the Invesco Fund;
●
Shareholders of record holding shares of AIM Weingarten Fund or AIM Constellation
Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously
owned shares and who purchase additional shares of Invesco Constellation Fund or Invesco
Charter Fund, respectively;
●
Unitholders of G/SET series unit investment trusts investing proceeds from such trusts
in shares of Invesco Constellation Fund in an account established without a designated intermediary;
provided, however, prior to the termination date of the trusts, a unitholder may invest proceeds
from the redemption or repurchase of his units only when the investment in shares of Invesco
Constellation Fund is effected within 30 days of the redemption or repurchase;
●
Shareholders of the former GT Global funds as of April 30, 1987 who since that date
continually have owned shares of one or more of these funds who purchase additional Class A shares;
●
Certain former AMA Investment Advisers' shareholders who became shareholders of the
AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT
Global funds since that time, who purchase additional Class A shares;
●
Shareholders of record of Advisor Class shares of an Invesco Fund on February 11,
2000 who have continuously owned shares of that Invesco Fund, who purchase additional shares of
that Invesco Fund;
●
Shareholders of record of Class K shares on October 21, 2005 whose Class K shares
were converted to Class A shares and who since that date have continuously held Class A
shares, who purchase additional Class A shares;
●
Shareholders of record of Class B shares of Invesco Global Dividend Growth Securities
Fund who received Class A shares of the Invesco Global Core Equity Fund in connection with
a reorganization on May 20, 2011 and who since that date have continuously owned Class A shares, who
purchase additional Class A shares of Invesco Global Core Equity Fund;
●
Shareholders of record of Class B shares of Invesco Van Kampen Global Equity Allocation
Fund who received Class A shares of the Invesco Global Core Equity Fund in connection with
a reorganization
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on May 20, 2011 and who since that date have continuously owned Class A shares, who
purchase additional Class A shares of Invesco Global Core Equity Fund; and
●
Unitholders of Invesco unit investment trusts who enrolled prior to December 3, 2007
to reinvest distributions from such trusts in Class A shares of the Invesco Funds, who receive
Class A shares of an Invesco Fund pursuant to such reinvestment program in an account established without
a designated intermediary. The Invesco Funds reserve the right to modify or terminate
this program at any time.
●
Certain IRA accounts and payroll deduct IRA programs held directly at Invesco for
which intermediaries offered Class A shares without an initial sales charge, pursuant to
an arrangement with OppenheimerFunds Distributor, Inc. prior to May 28, 2019.
●
Certain participants in Employer-Sponsored IRA Plans utilizing Invesco Trust Company
custodial accounts who were offered Class A shares without an initial sales charge prior to
December 15, 2023, who purchase additional Class A shares.
Payments to Dealers. Invesco Distributors may elect to re-allow the entire initial sales charge to dealers
for all sales with respect to which orders are placed with Invesco Distributors or
its designee during a particular period. Dealers to whom substantially the entire sales charge is re-allowed
may be deemed to be "underwriters" as that term is defined under the 1933 Act.
The financial intermediary through which you purchase your shares may receive all
or a portion of the sales charges and Rule 12b-1 distribution fees discussed above. In this context, "financial
intermediaries" include any broker, dealer, bank (including bank trust departments), insurance company
separate account, transfer agent, registered investment adviser, financial planner, retirement plan
administrator and any other financial intermediary having a selling, administration or similar agreement with
Invesco Distributors or one or more of its corporate affiliates (collectively, the Invesco Distributors Affiliates).
In addition to those payments, Invesco Distributors Affiliates may make additional cash payments to financial intermediaries
in connection with the promotion and sale of shares of the Invesco Funds. Invesco Distributors Affiliates
make these payments from their own resources, from Invesco Distributors' retention of underwriting
concessions and from payments to Invesco Distributors under Rule 12b-1 plans. In the case of sub-accounting
payments, discussed below, Invesco Distributors Affiliates will be reimbursed directly by the Invesco
Funds for such payments. These additional cash payments are described below. The categories described below
are not mutually exclusive. The same financial intermediary, or one or more of its affiliates, may
receive payments under more than one or all categories. Most financial intermediaries that sell shares of the
Invesco Funds receive one or more types of these cash payments. Financial intermediaries negotiate the cash payments
to be paid on an individual basis. Where services are provided, the costs of providing the services
and the overall package of services provided may vary from one financial intermediary to another. Invesco Distributors
Affiliates do not make an independent assessment of the cost of providing such services.
Certain financial intermediaries listed below received one or more types of the following
payments during the prior calendar year. This list is not necessarily current and will change over
time. Certain arrangements are still being negotiated, and there is a possibility that payments will be made
retroactively to financial intermediaries not listed below. Accordingly, please contact your financial intermediary
to determine whether they currently may be receiving such payments and to obtain further information regarding
any such payments.
Financial Support Payments. Invesco Distributors Affiliates make financial support payments as incentives to certain financial intermediaries to promote and sell shares of Invesco
Funds. The benefits Invesco Distributors Affiliates receive when they make these payments include, among
other things, placing Invesco Funds on the financial intermediary's funds sales system, and access (in some
cases on a preferential basis over other competitors) to individual members of the financial
intermediary's sales force or to the financial intermediary's management. Financial support payments are sometimes
referred to as "shelf space" payments because the payments compensate the financial intermediary for including
Invesco Funds in its Fund sales system (on its sales shelf). Invesco Distributors Affiliates compensate
financial intermediaries
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differently depending typically on the level and/or type of considerations provided
by the financial intermediary. In addition, payments typically apply only to retail sales, and may
not apply to other types of sales or assets (such as sales to Retirement and Benefit Plans, qualified tuition
programs, or fee based adviser programs – some of which may generate certain other payments described below).
The financial support payments Invesco Distributors Affiliates make may be calculated
on sales of shares of Invesco Funds (Sales-Based Payments), in which case the total amount of such payments
shall not exceed 0.25% of the public offering price of all such shares sold by the financial intermediary
during the particular period. Such payments also may be calculated on the average daily net assets of the
applicable Invesco Funds attributable to that particular financial intermediary (Asset-Based Payments),
in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during
a defined period. Sales-Based Payments primarily create incentives to make new sales of shares of Invesco
Funds and Asset-Based Payments primarily create incentives to retain previously sold shares of Invesco
Funds in investor accounts. Invesco Distributors Affiliates may pay a financial intermediary either
or both Sales-Based Payments and Asset-Based Payments.
Sub-Accounting and Networking Support Payments. The Transfer Agent, an Invesco Distributors Affiliate, acts as the transfer agent for the Invesco Funds, registering the transfer,
issuance and redemption of Invesco Fund shares, and disbursing dividends and other distributions to Invesco Funds
shareholders. However, many Invesco Fund shares are owned or held by financial intermediaries, as
that term is defined above, for the benefit of their customers. In those cases, the Invesco Funds often
do not maintain an account for the shareholder. Thus, some or all of the transfer agency functions for these
accounts are performed by the financial intermediary. In these situations, Invesco Distributors Affiliates may
make payments to financial intermediaries that sell Invesco Fund shares for certain transfer agency services,
including record keeping and sub-accounting shareholder accounts. Payments for these services typically do
not exceed 0.25% (for non-Class R5 shares) or 0.10% (for Class R5 shares) of average annual assets of such
share classes or $19 per annum per shareholder account (for non-Class R5 shares only). No Sub-Accounting
or Networking Support payments will be made with respect to Invesco Funds' Class R6 shares or Institutional
Class shares. Invesco Distributors Affiliates also may make payments to certain financial intermediaries
that sell Invesco Fund shares in connection with client account maintenance support, statement preparation
and transaction processing. The types of payments that Invesco Distributors Affiliates may make under
this category include, among others, payment of networking fees of up to $10 per shareholder account maintained
on certain mutual fund trading systems.
All fees payable by Invesco Distributors Affiliates pursuant to a sub-transfer agency,
omnibus account service or sub-accounting agreement are charged back to the Invesco Funds, subject
to certain limitations approved by the Board of the Trust.
Other Cash Payments. From time to time, Invesco Distributors Affiliates, at their expense and out of
their own resources, may provide additional compensation to financial intermediaries which
sell or arrange for the sale of shares of a Fund. Such compensation provided by Invesco Distributors Affiliates
may include payment of ticket charges per purchase or exchange order placed by a financial intermediary,
one-time payments for ancillary services such as setting up funds on a financial intermediary's mutual fund
trading systems, financial assistance to financial intermediaries that enable Invesco Distributors Affiliates
to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives
and other employees, client entertainment, client and investor events, and other financial intermediary-sponsored
events, and travel expenses, including lodging incurred by registered representatives
and other employees in connection with client prospecting, retention and due diligence trips. Other compensation
may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as the
Financial Industry Regulatory Authority (FINRA). Invesco Distributors Affiliates make payments for entertainment events they deem appropriate, subject to Invesco Distributors Affiliates guidelines and applicable
law. These payments may vary depending upon the nature of the event or the relationship.
Invesco Distributors Affiliates are motivated to make the payments described above
because they promote the sale of Invesco Fund shares and the retention of those investments by
clients of financial
L-10
intermediaries. To the extent financial intermediaries sell more shares of Invesco
Funds or retain shares of Invesco Funds in their clients' accounts, Invesco Distributors Affiliates benefit
from the incremental management and other fees paid to Invesco Distributors Affiliates by the Invesco Funds
with respect to those assets.
In certain cases these payments could be significant to the financial intermediary.
Your financial intermediary may charge you additional fees or commissions other than those disclosed
in the prospectus. You can ask your financial intermediary about any payments it receives from Invesco
Distributors Affiliates or the Invesco Funds, as well as about fees and/or commissions it charges. You should
consult disclosures made by your financial intermediary at the time of purchase.
Certain Financial Intermediaries That Received One or More Types of Payments
Admin Partners LLC
ADP Broker Dealer Inc
Alight Financial Solutions LLC
Allianz Life
Allstate
Alta Montclair
Altruist Financial LLC
American Enterprise Investment
American Fidelity Assurance Company
American General
American Portfolios Financial
American United Life Insurance Company
Ascensus LLC
Avantax Investment Services Inc
AXA Advisors LLC
AXA Equitable
AXOS Financial Inc.
Bank of America NA
Bank of New York Mellon
Bank of Oklahoma – Nabank & Co
Bay Bridge Administrators LLC
Benefit Plans Administrators
Benefit Trust Company
BMO Harris Bank NA
BOSC Inc
Brighthouse Life Insurance Co
Broadway National Bank
Brown Brothers Harriman & Co
Cadaret Grant and Co Inc
Cambridge Investment Research Inc
Cavu Securities, LLC
Cetera Financial Group Inc
Cetera Investment Services LLC
Charles Schwab and Company Inc
Citibank NA
Citigroup Global Markets
CoBank
Comerica Bank
Commonwealth Financial Network
CUSO Financial Services LP
Delaware Life Insurance Company
Digital Retirement Solutions
Educators Benefit Consultants LLC
Edward Jones & Co
Ekon Benefits
Empire Fidelity Investments
Empower
Envestnet Asset Management Inc
Envoy Plan Services Inc
Equitable Advisors LLC
Equitable Life
Farmers Financial Solutions LLC
Fidelity Brokerage Services
Fidelity Institutional
Fidelity Investments
Fifth Third
Financial Data Services Inc
First Command
First Financial Administrators
Frost Brokerage Services Inc
Frost National Bank
FSC Securities Corporation
Genworth Financial
Goldman Sachs & Co
Guardian Insurance & Annuity Co Inc
Hantz Financial Services Inc
Hare and Company
Hartford Life
Hilltop Securities Inc
Huntington Securities Inc
Institutional Cash Distributors LLC
Janney Montgomery Scott LLC
Jefferson National Life Insurance Company
Jefferson National Life Insurance Company of New York
John Hancock
JP Morgan Chase Bank
JP Morgan Clearing Corp
JP Morgan Securities LLC
Kestra Investment Services LLC
Key Bank National Association
Legend Group Adviserv
Lincoln Benefit Life Company
Lincoln Financial
Lincoln Financial Securities Corp
Lincoln Investment Planning
Lincoln National Life Insurance
LPL Financial LLC
M&T Bank
Mass Mutual
Merrill Lynch
Merrill Lynch Pierce Fenner and Smith Inc
Metropolitan Life Insurance Company
Minnesota Life
Mitsubishi UFJ Trust and Banking
MML Investors Services LLC
Moreton Asset Management
Moreton Capital Markets LLC
Morgan Stanley
MSCS Financial Services Inc
Mutual Securities Inc
National Benefit Services LLC
National Financial Services LLC
National Plan Administrators Inc
Nationwide
New York Life Insurance and Annuity Corporation
Newport Retirement Plan Services Inc
Next Financial Group Inc
Northwestern Mutual Investment Services
Osaic, Inc
Oppenheimer & Co Inc
Pacific Financial Group
Pacific Life Insurance Company
Penserv Plan Services Inc
Pershing
Pershing LLC
Primerica Financial Services
Plains Capital Bank
Plan Administrators Inc
PNC Capital Markets LLC
PNC Investments LLC
Principal Life Insurance Company
Protective Life
Pruco Life Insurance Company
Pruco Life Insurance Company of New Jersey
Pruco Securities LLC
Prudential
Raymond James
RBC Capital Markets LLC
RBC Wealth Management
Reliance Trust Company
Rhode Island
Riversource Life Insurance Company
Robert W Baird and Co Inc
Sanctuary Wealth Group
Sammons Financial Network LLC
SB Business Services LLC
Schools First Plan Administration
Security Distributors Inc
Security Financial Resources
SEI Private Trust Company
L-11
Sorrento Pacific Financial LLC
Standard Insurance Company
State Street Corporation
Stifel Nicolaus & Co Inc
Sungard
T Rowe Price Associates Inc
Talcott Resolution Life Insurance Company
TCG Administrators
TD Ameritrade
TDS Group Inc
Texas Capital Bank
The OMNI Group
TIAA-CREF
Transamerica Financial Life Insurance Company
Transamerica Life Insurance Company
Treasury Curve
Truist
Trust Management Network LLC
UBS Financial Services Inc
Ultimate Asset Services LLC
UMB Bank
Union Bank
US Bancorp Investments Inc
US Bank
VALIC Financial
Vanguard Brokerage Services
Vanguard Group Inc
Variable Annuity Life Insurance Co
VOYA Financial Advisors Inc
VOYA Insurance and Annuity Company
VOYA Retirement Insurance and Annuity Company
VOYA Services Company
VRSCO-American General Distributors
Wedbush Securities Inc
Wells Fargo
Wells Fargo Bank NA
Wells Fargo Securities LLC
Western International Securities Inc
Zions First National Bank
Zurich American Life Insurance Company
Purchases of Class C Shares
Class C shares are sold at net asset value, and are not subject to an initial sales
charge. Investors in Class C shares may pay a CDSC if they redeem their shares within the first year after
purchase. See the prospectus for additional information regarding this CDSC. Invesco Distributors may
pay sales commissions to dealers and institutions who sell Class C shares of the Invesco Funds at the time
of such sales. Payments with respect to Invesco Funds other than Invesco Floating Rate ESG Fund and Invesco
Short Term Bond Fund will generally equal 1.00% of the purchase price and will consist of a sales
commission of 0.75% plus an advance of the first year service fee of 0.25%. Payments with respect to Invesco Floating
Rate ESG Fund will equal 0.75% of the purchase price and will consist of a sales commission of 0.50%
plus an advance of the first year service fee of 0.25%. Payments with respect to Invesco Short Term Bond
Fund will equal 0.65% of the purchase price and will consist of a sales commission of 0.40% plus an advance
of the first year service fee of 0.25%. (Invesco Distributors has contractually agreed to waive 0.15% of Rule
12b-1 distribution plan payments of Class C shares of Invesco Short Term Bond Fund. Unless Invesco Distributors
continues the fee waiver agreement, it will terminate on June 30, 2023. While the fee waiver agreement
is in place, payments with respect to Invesco Short Term Bond will equal 0.50% of the purchase price and
will consist of a sales commission of 0.25% plus an advance of the first year service fee of 0.25%.) These
commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM
Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Invesco Funds on or after
May 1, 1995, and in circumstances where Invesco Distributors grants an exemption on particular transactions.
Payments with Regard to Converted Class K Shares
For Class A shares acquired by a former Class K shareholder (i) as a result of a fund
merger; or (ii) as a result of the conversion of Class K shares into Class A shares on October 21, 2005,
Invesco Distributors will pay financial intermediaries 0.45% on such Class A shares as follows: (i) 0.25% from
the Class A shares' Rule 12b-1 plan fees; and (ii) 0.20% from Invesco Distributors' own resources provided
that, on an annualized basis for 2005 as of October 21, 2005, the 0.20% exceeds $2,000 per year.
Purchase and Redemption of Class P Shares
Certain former investors in the AIM Summit Plans I and II may acquire Class P shares
at net asset value. Please see Invesco Summit Fund's prospectus for details.
Purchases of Class R Shares
Class R shares are sold at net asset value and are not subject to an initial sales
charge. Invesco Distributors may pay dealers of record an annual distribution and/or service fee of
up to 0.50% of average daily net assets and such payments will commence immediately. For any Class R shares
sold on or before January 17, 2020 that received an upfront dealer concession, Invesco Distributors
may pay dealers of record an annual distribution and/or service fee of up to 0.50% of average daily net assets
and such payments will commence in the 13th month from the date of purchase.
L-12
Purchases of Class S Shares
Class S shares are limited to investors who purchase shares with the proceeds received
from a systematic contractual investment plan redemption within the 12-months prior to purchasing
Class S shares, and who purchase through an approved financial intermediary that has an agreement
with the distributor to sell Class S shares. Class S shares are not otherwise sold to members of the general
public. An investor purchasing Class S shares will not pay an initial sales charge. The investor will
no longer be eligible to purchase additional Class S shares at that point where the value of the contributions
to the prior systematic contractual investment plan combined with the subsequent Class S share contributions
equals the face amount of what would have been the investor's systematic contractual investment plan
under the 30-year investment option. The face amount of a systematic contractual investment plan is
the combined total of all scheduled monthly investments under that plan. For a plan with a scheduled monthly
investment of $100.00, the face amount would have been $36,000.00 under the 30-year extended investment option.
Class S shares have a 12b-1 fee of 0.15%.
Purchases of Class Y Shares
Class Y shares are sold at net asset value, and are not subject to an initial sales
charge or to a CDSC. Please refer to the prospectus for more information.
Purchases of Investor Class Shares
Investor Class shares are sold at net asset value, and are not subject to an initial
sales charge or to a CDSC. Invesco Distributors may pay dealers and institutions an annual service fee
of 0.25% of average daily net assets and such payments will commence immediately. The Investor Class is closed
to new investors.
Purchases of Class R5 and R6 Shares
Class R5 and R6 shares are sold at net asset value, and are not subject to an initial
sales charge or to a CDSC. Please refer to the Class R5 and R6 prospectus for more information.
Closure of Class R5 shares
The Fund will
discontinue sales of its Class R5 shares to new investors after the close of business on September
30, 2024. Existing investors who were invested in Class R5 shares of the Fund on September 30, 2024,
and who remain invested in Class R5 shares of the Fund after that date, may continue to make additional
purchases of Class R5 shares of the Fund. Any Employer Sponsored Retirement and Benefit Plan or its affiliated
plans may continue to make additional purchases of Class R5 shares of the Fund and may add new participant
accounts at the plan level that may purchase Class R5 shares of the Fund if the Employer Sponsored
Retirement and Benefit Plan or its affiliated plan were invested in Class R5 shares of the Fund as of
September 30, 2024 and remain invested in Class R5 shares of the Fund after that date.
Exchanges
Terms and Conditions of Exchanges. Normally, shares of an Invesco Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may
be, determined on the date that such request is received. If a shareholder is exchanging into a Fund paying
daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day after the exchange.
Redemptions
General. Shares of the Invesco Funds may be redeemed directly through the Transfer Agent or
through any dealer who has entered into an agreement with Invesco Distributors. A redemption
is effected at the net asset value per share of the applicable Fund next determined after the redemption
request is received in good order. To be in good order, the investor, either directly or through his financial
intermediary must give the
L-13
Funds’ transfer agent all required information and documentation. Payments from a redemption generally constitute taxable events. Because such payments are funded by the redemption shares,
they may result in a return of capital and in capital gains or losses, rather than in ordinary income.
An investor or a financial intermediary may submit a written request to the Funds’ transfer agent for correction of transactions involving Fund shares. If the Funds’ transfer agent agrees to correct a transaction, and the correction requires a dividend adjustment, the investor or the intermediary
must agree in writing to reimburse the Funds for any resulting loss.
Payment for redeemed institutional shares is normally made by Federal Reserve wire
to the bank account designated in the investor’s account application, while payment for redeemed retail shares is normally made by check, but may be sent electronically by either Federal Reserve wire or ACH at the investor’s request. Any changes to bank instructions must be submitted to the Funds’ transfer agent in writing. The Funds’ transfer agent may request additional documentation. For funds that allow checkwriting, if
you do not have a sufficient number of shares in your account to cover the amount of the check and any applicable
deferred sales charge, the check will be returned and no shares will be redeemed. Because it is not possible
to determine your account’s value in advance, you should not write a check for the entire value of your account or try to close your account by writing a check. Effective August 28, 2023, the Funds’ transfer agent no longer accepts Check Writing authorization forms. Effective December 31, 2023, the Fund’s transfer agent ceased accepting checks as a valid form of redemption.
The Funds’ transfer agent may request that an intermediary maintain separate master accounts in the Funds for shares held by the intermediary (a) for its own account, for the account
of other institutions and for accounts for which the intermediary acts as a fiduciary; and (b) for accounts for
which the intermediary acts in some other capacity. An intermediary may aggregate its master accounts and sub-accounts
to satisfy the minimum investment requirement.
With regard to Money Market Funds that do not qualify as Government Money Market Funds,
the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares
redeemed, if such fee is determined to be in the best interest of the Fund. The Board has delegated liquidity fee determinations to the Adviser. For Funds that do not qualify as Government Money Market Funds, when a fee is in place, shareholders will not be permitted to exchange into or out of a Fund.
The Board may, in its discretion, terminate a liquidity fee at any time if it believes such action to be in the best interest of the Fund and its shareholders. When a fee is in place, the Fund may elect not to permit the purchase of shares or to subject the purchase of shares to certain conditions, which
may include affirmation of the purchaser’s knowledge that a fee is in effect.
The Board may, in its discretion, permanently suspend redemptions and liquidate if,
among other things, a Money Market Fund, at the end of a business day, has less than 10% of its total assets
invested in weekly liquid assets. The Board of the Retail and Government Money Market Funds may suspend
redemptions and liquidate if the Board determines that the deviation between its amortized cost price
per share and its market-based NAV per share may result in material dilution or other unfair results to investors
or existing shareholders.
Systematic Redemption Plan. A Systematic Redemption Plan permits a shareholder of an Invesco Fund to withdraw on a regular basis at least $50 per withdrawal. At the time the withdrawal
plan is established, the total account value must be $5,000 or more. Under a Systematic Redemption Plan, all
shares are to be held by the Transfer Agent. To provide funds for payments made under the Systematic Redemption
Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value
in effect at the time of each such redemption.
Payments under a Systematic Redemption Plan generally constitute taxable events. Because
such payments are funded by the redemption of shares, they may result in a return of capital
and in capital gains or losses, rather than in ordinary income. Also because sales charges are imposed on
additional purchases of Class A shares, it is disadvantageous to effect such purchases while a Systematic
Redemption Plan is in effect.
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Each Invesco Fund bears its share of the cost of operating the Systematic Redemption
Plan.
Contingent Deferred Sales Charges Imposed upon Redemption of Shares
A CDSC may be imposed upon the redemption of Large Purchases of Class A shares of
Category I, II, IV, V and VI Funds, upon the redemption of Class C shares. (No CDSC applies to Class A2
shares.) See the prospectus for additional information regarding CDSCs.
Contingent Deferred Sales Charge Exceptions for Large Purchases of Class A Shares. An investor who has made a Large Purchase of Class A shares of a Category I, II, IV, V or VI Fund,
will not be subject to a CDSC upon the redemption of those shares in the following situations:
●
Redemptions of shares held by an Employer Sponsored Retirement and Benefit Plan or
SIMPLE IRA Plan in cases where (i) the plan has remained invested in Class A shares of a Fund
for at least 12 months, or (ii) the redemption is not a complete redemption of all Class A shares
held by the plan;
●
Redemptions of shares by the investor where the investor's financial intermediary
has elected to waive the amounts otherwise payable to it by Invesco Distributors and notifies Invesco
Distributors prior to the time of investment;
●
Minimum required distributions made in connection with a Retirement and Benefit Plan
following attainment of age 70 1∕2 , or older, and only with respect to that portion of such distribution that does
not exceed 12% annually of the participant's beneficiary account value in a particular
Fund;
●
Redemptions following the death or post-purchase disability of a registered shareholder
or beneficial owner of an account. Subsequent purchases into such account are not eligible for the
CDSC waiver; and
●
Amounts from a monthly, quarterly or annual Systematic Redemption Plan of up to an
annual amount of 12% of the account value on a per fund basis, provided; the investor reinvests
his dividends.
Contingent Deferred Sales Charge Exceptions for Class C Shares. CDSCs will not apply to the following redemptions of Class C shares, as applicable:
●
Redemptions following the death or post-purchase disability of a registered shareholder
or beneficial owner of an account. Subsequent purchases into such account are not eligible for the
CDSC waiver;
●
Distributions from Retirement and Benefit Plans where redemptions result from (i)
required minimum distributions to plan participants or beneficiaries who are age 70 1∕2 or older, and only with respect to that portion of such distributions that does not exceed 12% annually of the participant's
or beneficiary's account value in a particular Fund; (ii) in kind transfers of assets
where the participant or beneficiary notifies the distributor of the transfer no later than the time the
transfer occurs; (iii) tax-free rollovers or transfers of assets to another Retirement and Benefit Plan invested
in Class C shares of one or more of the Funds; (iv) tax-free returns of excess contributions
or returns of excess deferral amounts; and (v) distributions on the death or disability (as defined in
the Code) of the participant or beneficiary;
●
Amounts from a monthly or quarterly Systematic Redemption Plan of up to an annual
amount of 12% of the account value on a per fund basis provided the investor reinvests his dividends;
●
Liquidation initiated by the Fund when the account value falls below the minimum required
account size of $500; and
●
Investment account(s) of Invesco and its affiliates.
In addition to the foregoing, CDSCs will not apply to the following redemptions of
Class C shares:
●
Redemption of shares held by Employer Sponsored Retirement and Benefit Plans or Employer
L-15
Sponsored IRAs in cases where (i) the plan has remained invested in Class C shares
of a Fund for at least 12 months, or (ii) the redemption is not a complete redemption of all Class
C shares held by the plan; or
●
A total or partial redemption of shares where the investor's financial intermediary
has elected to waive amounts otherwise payable to it by Invesco Distributors and notifies Invesco
Distributors prior to the time of investment.
It is possible that a financial intermediary may not be able to offer one or more
of the waiver categories described in this section. If this situation occurs, it is possible that the investor
would need to invest directly through an account without a designated intermediary in order to take advantage of
these waivers. Investors should ask their financial intermediary whether they offer the above CDSCs. The Funds
may terminate or amend the terms of these CDSCs at any time.
General Information Regarding Purchases, Exchanges and Redemptions
Good Order. Purchase, exchange and redemption orders must be received in good order in accordance
with the Transfer Agent's policies and procedures and U.S. regulations. The Transfer
Agent reserves the right to refuse transactions. Transactions not in good order will not be processed and once
brought into good order, will receive the current price. To be in good order, an investor or financial intermediary
must supply the Transfer Agent with all required information and documentation, including signature
guarantees and notary public stamps as required. In addition, if a purchase of shares is made by check,
the check must be received in good order. This means that the check must be properly completed and signed, and
legible to the Transfer Agent in its sole discretion. If a check used to purchase shares does not clear, or
if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting
loss.
Authorized Agents. The Transfer Agent and Invesco Distributors may authorize agents to accept purchase and redemption orders that are in good order on behalf of the Invesco Funds.
In certain cases, these authorized agents are authorized to designate other intermediaries to accept
purchase and redemption orders on a Fund's behalf. The Fund will be deemed to have received the purchase or
redemption order when the Fund's authorized agent or its designee accepts the order. The order will be priced
at the net asset value next determined after the order is accepted by the Fund's authorized agent or its
designee. Orders submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts it, which may not occur on the day submitted to the financial
intermediary.
Signature Guarantees. Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that
such institution or organization qualifies as an "eligible guarantor institution" as that term is defined
in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference
guides contained in the Transfer Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. While a notary public
stamp may be accepted in certain limited situations, it is not an acceptable replacement for a signature guarantee.
The Transfer Agent will also accept signatures with either: (1) a signature guaranteed with a medallion
stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion
Signature Program, provided that in either event, the amount of the total transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular
institution or organization qualifies as an "eligible guarantor institution" and to determine how
to fulfill a signature guarantee requirement, an investor should contact the Client Services Department of the Transfer
Agent.
Transactions by Telephone. By signing an account application form, an investor agrees that the Transfer Agent may surrender for redemption any and all shares held by the Transfer Agent in
the designated account(s), or in any other account with any of the Invesco Funds, present or future,
which has the identical registration as the designated account(s). The Transfer Agent is thereby authorized
and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed,
from any person who requests the redemption proceeds to be applied to purchase shares in any one or more
of the Invesco Funds,
L-16
provided that such Fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration of the shares being redeemed.
An investor acknowledges by signing the form that he understands and agrees that the Transfer
Agent may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected
in accordance with the authorization set forth in these instructions if they reasonably believe such request
to be genuine. Procedures for verification of telephone transactions may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's Social Security Number and
current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves
the right to modify or terminate the telephone exchange privilege at any time without notice. An investor
may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must
be effected in writing by the investor.
Internet Transactions. An investor may effect transactions in his account through the Internet by establishing a Personal Identification Number (PIN). By establishing a PIN the investor
acknowledges and agrees that neither the Transfer Agent nor Invesco Distributors will be liable for
any loss, expense or cost arising out of any Internet transaction effected by them in accordance with any instructions
submitted by a user who transmits the PIN as authentication of his or her identity. Procedures for
verification of Internet transactions include requests for confirmation of the shareholder's PIN and mailing
of confirmations promptly after the transactions. The investor also acknowledges that the ability to effect
Internet transactions may be terminated at any time by the Invesco Funds. Policies for processing transactions
via the Internet may differ from policies for transactions via telephone due to system settings.
Inactive or Unclaimed Accounts. The Fund may be required to close your account after a period of inactivity, as determined by applicable U.S. state or territory abandoned or unclaimed
property laws and regulations, and transfer your shares to the appropriate U.S. state or territory.
Please be advised that abandoned or unclaimed property laws and regulations for certain U.S. states or territories
require financial organizations to transfer (escheat) unclaimed property to the appropriate U.S. state
or territory if no activity occurs in an account for a period of time as specified by applicable laws and regulations.
These laws and regulations may require the transfer of shares of the Fund, including shares held
through a traditional or Roth IRA account. For traditional IRA accounts escheated to a U.S. state or territory under
these abandoned or unclaimed property laws and regulations, the escheatment will generally be treated
as a taxable distribution from your IRA to you; federal and any applicable state income tax may be withheld.
This may apply to Roth IRA accounts in addition to traditional IRA accounts. It is the responsibility of the investor to ensure that the Transfer Agent maintains a correct address for his account(s). An incorrect address
may cause an investor's account statements and other mailings to be returned to the Transfer Agent. Upon receiving
returned mail, the Transfer Agent will attempt to locate the investor or rightful owner of the account.
If the Transfer Agent is unable to locate the investor, then it will determine whether the investor's account
has legally been abandoned. The Transfer Agent is legally obligated to escheat abandoned property to the appropriate state's unclaimed property administrator in accordance with statutory requirements. The investor's
last known address of record determines which state has jurisdiction. For more information on unclaimed property and how to maintain an active account, please contact the Fund's transfer agent.
Retirement and Benefit Plans Sponsored by Invesco Distributors. Invesco Distributors acts as the prototype sponsor for certain types of Retirement and Benefit Plan documents. These
Retirement and Benefit Plan documents are generally available to anyone wishing to invest Retirement and
Benefit Plan assets in the Funds. These documents are provided subject to terms, conditions and fees that vary
by plan type. Contact your financial intermediary for details.
Miscellaneous Fees. In certain circumstances, the intermediary maintaining the shareholder account through which your Fund shares are held may assess various fees related to the maintenance
of that account, such as:
●
an annual custodial fee on accounts where Invesco Distributors acts as the prototype
sponsor;
●
expedited mailing fees in response to overnight redemption requests; and
L-17
●
copying and mailing charges in response to requests for duplicate statements.
Please consult with your intermediary for further details concerning any applicable
fees.
Offering Price
The following formula may be used to determine the public offering price per Class
A share of an investor’s investment:
Net Asset Value / (1 – Sales Charge as % of Offering Price) = Offering Price. For example, at the close of business on February 29, 2024, a Fund – Class A shares had a net asset value per share of $10.66. The offering price, assuming an initial sales charge of 5.50%, therefore was $11.28.
Class R5 and R6 shares of the Invesco Funds are offered at net asset value.
The offering price of each money market fund's shares is the Fund's net asset value
per share. The Invesco U.S. Government Money Portfolio and Invesco Government Money Market Fund value
their portfolio securities on the basis of amortized cost, which approximates market value. This method
of valuation is designed to enable a Fund to price its shares at $1.00 per share. The Funds cannot
guarantee their net asset value will always remain at $1.00 per share.
Calculation of Net Asset Value
Each Invesco Fund, except for Invesco Government Money Market Fund, generally determines
its net asset value per share once daily on each day the NYSE is open for trading (a business
day) as of approximately 4:00 p.m. Eastern Time (the customary close of regular trading) or earlier
in the case of a scheduled early close. In the event of an unscheduled early close of the NYSE, each
Fund, except for Invesco Government Money Market Fund, generally still will determine the net asset
value of its shares as of 4:00 p.m. Eastern Time on that business day. Invesco Government Money Market Fund
will generally determine the net asset value of their shares at 5:30 p.m. Eastern Time on each business
day. The Invesco Funds determine net asset value per share by dividing the value of an Invesco Fund's
securities, cash and other assets (including interest accrued but not collected) attributable to a particular
class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by
the total number of shares outstanding of that class. Determination of an Invesco Fund's net asset value per
share is made in accordance with generally accepted accounting principles. Generally, the portfolio
securities for non-money market funds are recorded in the NAV no later than trade date plus one, except on
fiscal quarter ends, such securities are recorded on trade date. For money market funds, portfolio securities
are recorded in the NAV on trade date, as described below. Under normal circumstances, market valuation and
fair valuation, as described below, are not used to determine share price for money market funds that
seek to maintain a constant NAV because shares of money market funds are valued at amortized cost, as
described below.
With respect to non-money market funds, the net asset value for shareholder transactions
may be different than the net asset value reported in the Invesco Fund's financial statement
due to adjustments required by generally accepted accounting principles made to the net asset value of
the Invesco Fund at period end.
Futures contracts may be valued at the final settlement price set by an exchange on
which they are principally traded. Where a final settlement price exists, exchange traded options are valued at the final settlement price from the exchange where the option principally trades. When a final settlement price does not exist, exchange traded options shall be valued at the mean of the last bid/ask quotation generally from the exchange where the option principally trades. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. A security listed
or traded on an exchange (excluding convertible bonds) held by an Invesco Fund is valued at its last
sales price or official closing price on the exchange where the security is principally traded or, lacking
any trades or official closing price on a particular day, the security may be valued at the closing bid price on
that day. Each equity security traded in the over-the-counter market is valued on the basis of prices furnished by
independent pricing services vendors or market makers. Debt securities (including convertible bonds) and
unlisted equities are fair
L-18
valued using an evaluated quote provided by an independent pricing vendor. Evaluated
quotes provided by the pricing vendor 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 special securities, dividend rate, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Pricing services generally value fixed income securities assuming orderly transactions of institutional round lot size, but a Fund may hold or transact
in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round
lots. Securities for which market prices are not provided by any of the above methods may be valued based upon
quotes furnished by independent sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations the mean between the last bid and ask prices. Senior secured floating
rate loans, corporate loans and senior secured floating rate debt securities 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. Investments
in open-end and closed-end registered investment companies that do not trade on an exchange are valued
at the end of day NAV per share.
Generally, trading in corporate bonds, U.S. government securities and money market
instruments is substantially completed each day prior to the close of the customary trading session
of the NYSE. The values of such securities used in computing the NAV of an Invesco Fund's shares are determined
at such times. Occasionally, events affecting the values of such securities may occur between the
times at which such values are determined and the close of the customary trading session of the NYSE.
If the Adviser believes a development/event has actually caused a closing price to no longer reflect current
market value, the closing price may be adjusted to reflect the fair value of the affected security as of the
close of the NYSE as determined in good faith using the valuation policy approved by the Board and related
procedures.
Foreign securities are converted into U.S. dollar amounts using 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 not representative
of market value in the Adviser’s judgment (“unreliable”). If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may
make the closing price unreliable, the Adviser may fair value the security. If an issuer specific event has
occurred that the Adviser determines, in its judgment, is likely to have affected the closing price of a foreign
security, it will price the security at fair value in good faith using the valuation policy approved by the Board
and related procedures. Adjustments to closing prices to reflect fair value may also be based on a screening
process from a pricing vendor 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 market value as of the close
of the NYSE. For foreign securities where the Adviser believes, at the approved degree of certainty,
that the price is not reflective of current market value, the Adviser will use the indication of fair value
from the pricing vendor to determine the fair value of the security. The pricing vendor, pricing methodology
or degree of certainty may change from time to time. Multiple factors may be considered by the pricing vendor
in determining adjustments to reflect fair value and may include information relating to sector indices,
American Depositary Receipts, domestic and foreign index futures, and exchange-traded funds.
Invesco Fund securities primarily traded in foreign markets may be traded in such
markets on days that are not business days of the Invesco Fund. Because the NAV per share of each Invesco
Fund is determined only on business days of the Invesco Fund, the value of the portfolio securities of
an Invesco Fund that invests in foreign securities may change on days when an investor cannot exchange
or redeem shares of the Invesco Fund.
Securities for which market quotations are not available or are unreliable are valued
at fair value as determined in good faith by the Adviser in accordance with the valuation policy approved by the Board and
L-19
related procedures. Issuer specific events, market trends, bid/ask quotes of brokers
and information providers and other market data may be reviewed in the course of making a good faith determination
of a security's fair value.
Calculation of Net Asset Value (Certain Invesco Money Market Funds)
The Board has established procedures, in accordance with Rule 2a-7 under the 1940
Act, designed to stabilize each Fund’s net asset value per share at $1.00, to the extent reasonably possible. Such procedures include daily calculation of the extent of the deviation, if any, of the current net
asset value per share using available market quotations from the fund’s amortized cost price per share, and the periodic review by the Trustees of the amount of such deviation. The reviews are used to determine whether
net asset value, calculated by using available market quotations, deviates from $1.00 per share and,
if so, whether such deviation may result in material dilution or is otherwise unfair to investors or existing
shareholders. In the event the trustees determine that a material deviation exists, they intend to take
such corrective action as they deem necessary and appropriate. Such actions may include selling portfolio securities
prior to maturity in order to realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends, redeeming shares in kind, or establishing a net asset value per share by using available
market quotations. When available market quotations are used to establish the market-based net asset
value, the net asset value could possibly be more or less than $1.00 per share. The Funds intend to comply with
any amendments made to Rule 2a-7 promulgated under the 1940 Act which may require corresponding changes in the Funds’ procedures which are designed to stabilize each Fund’s price per share at $1.00.
Under the amortized cost method, each investment is valued at its cost and thereafter
any discount or premium is amortized on a constant basis to maturity. Although this method provides
certainty of valuation, it may result in periods in which the amortized cost value of the Funds’ investments is high or lower than the price that would be received if the investments were sold.
Redemptions in Kind
Although the Invesco Funds generally intend to pay redemption proceeds solely in cash,
the Invesco Funds reserve the right to determine, in their sole discretion, whether to satisfy
redemption requests by making payment in securities or other property (known as a redemption in kind). For
instance, an Invesco Fund may make a redemption in kind if a cash redemption would disrupt its operations
or performance. Securities that will be delivered as payment in redemptions in kind will be valued
using the same methodologies that the Invesco Fund typically utilizes in valuing such securities.
Shareholders receiving such securities are likely to incur transaction and brokerage costs on their subsequent
sales of such securities, and the securities may increase or decrease in value until the shareholder sells them.
The Trust, on behalf of the Invesco Funds, made an election under Rule 18f-1 under the 1940 Act (a Rule 18f-1
Election) and therefore, the Trust, on behalf of an Invesco Fund, is obligated to redeem for cash all shares
presented to such Invesco Fund for redemption by any one shareholder in an amount up to the lesser of $250,000
or 1% of that Invesco Fund's net assets in any 90-day period. The Rule 18f-1 Election is irrevocable while
Rule 18f-1 under the 1940 Act is in effect unless the SEC by order permits withdrawal of such Rule 18f-1
Election.
Backup Withholding
Accounts submitted without a correct, certified taxpayer identification number (TIN)
or, alternatively, a correctly completed and currently effective IRS Form W-8 (for non-resident aliens)
or Form W-9 (for U.S. persons including resident aliens) accompanying the registration information, generally
will be subject to backup withholding.
Each Invesco Fund, and other payers, generally must withhold 24% of reportable dividends
(whether paid in cash or reinvested in additional Invesco Fund shares), including exempt-interest
dividends, in the case of any shareholder who fails to provide the Invesco Funds with a TIN and a certification
that he is not subject to backup withholding.
L-20
An investor is subject to backup withholding if:
1. The investor fails to furnish a correct TIN to the Invesco Fund;
2. the IRS notifies the Invesco Fund that the investor furnished an incorrect TIN;
3. the investor or the Invesco Fund is notified by the IRS that the investor is subject
to backup withholding because the investor failed to report all of the interest and dividends on such investor’s tax return (for reportable interest and dividends only);
4. the investor fails to certify to the Invesco Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only);
or
5. the investor does not certify his TIN. This applies only to non-exempt mutual fund
accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations
discussed above. Redemption proceeds are subject to backup withholding only if (1), (2) or (5) above
applies.
Certain payees and payments are exempt from backup withholding and information reporting.
Invesco or the Transfer Agent will not provide Form 1099 to those payees.
Investors should contact the IRS if they have any questions concerning withholding.
IRS Penalties. Investors who do not supply the Invesco Funds with a correct TIN will be subject
to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not
willful neglect. If an investor falsifies information on this form or makes any other false statement resulting
in no backup withholding on an account which should be subject to backup withholding, such investor
may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines
and/or imprisonment.
Nonresident Aliens. Nonresident alien individuals and foreign entities with a valid Form W-8 are not
subject to the backup withholding previously discussed. The Form W-8 generally remains
in effect for a period starting on the date the Form is signed and ending on the last day of the third succeeding
calendar year. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate
on ordinary income dividends and other distributions. Under applicable treaty law, residents of treaty
countries may qualify for a reduced rate of withholding or a withholding exemption. Nonresident alien individuals
and some foreign entities failing to provide a valid Form W-8 may be subject to backup withholding
and Form 1099 reporting.
L-21
APPENDIX M - TOTAL SALES CHARGES
The following chart reflects the total sales charges paid in connection with the sale
of applicable classes of shares of the Funds and the amount retained by Invesco Distributors for the last
three fiscal years or periods, as applicable, ended February 28 or 29.
|
|
2024
|
2023
|
2022
|
|||
|
|
Sales Charges
|
Amount Retained
|
Sales Charges
|
Amount Retained
|
Sales Charges
|
Amount Retained
|
|
Invesco Corporate Bond Fund
|
$1,332,391
|
$101,424
|
$1,176,815
|
$88,963
|
$2,303,003
|
$176,002
|
|
Invesco Global Real Estate Fund
|
27,924
|
4,800
|
43,267
|
6,385
|
86,328
|
12,488
|
|
nvesco Government Money Market Fund
|
0
|
5,000
|
0
|
0
|
0
|
0
|
|
Invesco High Yield Fund
|
362,253
|
31,742
|
342,869
|
29,396
|
801,350
|
60,479
|
|
Invesco Income Fund
|
116,006
|
14,580
|
132,317
|
13,553
|
143,444
|
15,084
|
|
Invesco Intermediate Bond Factor Fund
|
105,043
|
13,266
|
114,404
|
14,930
|
136,343
|
16,601
|
|
Invesco Real Estate Fund
|
251,425
|
41,604
|
364,190
|
58,922
|
532,601
|
80,091
|
|
Invesco Short Duration Inflation Protected Fund
|
92,617
|
12,160
|
286,981
|
50,600
|
155,077
|
24,461
|
|
Invesco Short Term Bond Fund
|
492,448
|
72,746
|
513,671
|
71,967
|
777,325
|
121,816
|
|
Invesco U.S. Government Money Portfolio
|
0
|
0
|
0
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The contingent deferred sales charges paid by certain shareholders of the Funds and
retained by Invesco Distributors for the last three fiscal years or periods, as applicable, ended February 28
or 29 is reflected below:
|
|
2024
|
2024
|
2024
|
2024
|
2024
|
2023
|
2023
|
2023
|
2023
|
2023
|
2022
|
2022
|
2022
|
2022
|
2022
|
|
Fund
|
Class A
|
Class A2
|
Class C
|
Class CX
|
Invesco
Cash
Reserve
|
Class A
|
Class A2
|
Class C
|
Class CX
|
Invesco
Cash
Reserve
|
Class A
|
Class A2
|
Class C
|
Class CX
|
Invesco
Cash
Reserve
|
|
Invesco Corporate Bond
Fund
|
$10,292
|
N/A
|
$1,108
|
N/A
|
N/A
|
$14,839
|
N/A
|
$3,803
|
N/A
|
N/A
|
$13,636
|
N/A
|
$4,993
|
N/A
|
N/A
|
|
Invesco Global Real
Estate Fund
|
469
|
N/A
|
66
|
N/A
|
N/A
|
127
|
N/A
|
247
|
N/A
|
N/A
|
84
|
N/A
|
120
|
N/A
|
N/A
|
|
Invesco Government
Money Market Fund
|
2,196
|
N/A
|
16,243
|
$ -
|
$2,678
|
2,179
|
N/A
|
15,791
|
$-
|
$89,788
|
286
|
N/A
|
9,906
|
$-
|
$886
|
|
Invesco High Yield Fund
|
9,204
|
N/A
|
2,194
|
N/A
|
N/A
|
6,223
|
N/A
|
2,000
|
N/A
|
N/A
|
1,761
|
N/A
|
1,005
|
N/A
|
N/A
|
|
Invesco Income Fund
|
57
|
N/A
|
975
|
N/A
|
N/A
|
2,650
|
N/A
|
19,207
|
N/A
|
N/A
|
216
|
N/A
|
1,066
|
N/A
|
N/A
|
|
Invesco Intermediate Bond
Factor Fund
|
4
|
N/A
|
14
|
N/A
|
N/A
|
42
|
N/A
|
242
|
N/A
|
N/A
|
5,543
|
N/A
|
1,388
|
N/A
|
N/A
|
|
Invesco Real Estate Fund
|
3,577
|
N/A
|
911
|
N/A
|
N/A
|
2,565
|
N/A
|
1,983
|
N/A
|
N/A
|
2,219
|
N/A
|
2,944
|
N/A
|
N/A
|
|
Invesco Short Duration
Inflation Protected Fund
|
21,129
|
$-
|
N/A
|
N/A
|
N/A
|
57,207
|
$-
|
N/A
|
N/A
|
N/A
|
15,761
|
$-
|
N/A
|
N/A
|
N/A
|
|
Invesco Short Term Bond
Fund
|
69,335
|
N/A
|
6,991
|
N/A
|
N/A
|
138,358
|
N/A
|
8,738
|
N/A
|
N/A
|
227,685
|
N/A
|
693
|
N/A
|
N/A
|
|
Invesco U.S. Government
Money Portfolio
|
N/A
|
N/A
|
3,862
|
N/A
|
N/A
|
N/A
|
N/A
|
2,977
|
N/A
|
N/A
|
N/A
|
N/A
|
2,441
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M-1
APPENDIX N - AMOUNTS PAID TO INVESCO DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLANS
A list of amounts paid by each class of shares to Invesco Distributors pursuant to
the Plan for the fiscal year or periods, as applicable, ended February 29, 2024 follows:
|
Fund
|
Class A
|
Class A2
|
Class AX
|
Class C
|
Class CX
|
Class R
|
Invesco Cash Reserve
|
Investor Class
|
|
Invesco Corporate Bond Fund
|
$2,605,909
|
N/A
|
N/A
|
$331,492
|
N/A
|
$67,977
|
N/A
|
N/A
|
|
Invesco Global Real Estate Fund
|
187,788
|
N/A
|
N/A
|
33,196
|
N/A
|
103,106
|
N/A
|
N/A
|
|
Invesco Government Money Market Fund
|
672,740
|
N/A
|
$93,424
|
1,004,714
|
$1,794
|
741,802
|
$ 5,590,643
|
N/A
|
|
Invesco High Yield Fund
|
1,374,360
|
N/A
|
N/A
|
165,961
|
N/A
|
N/A
|
N/A
|
$142,421
|
|
Invesco Income Fund
|
611,503
|
N/A
|
N/A
|
44,247
|
N/A
|
21,989
|
N/A
|
18,350
|
|
Invesco Intermediate Bond Factor Fund
|
232,705
|
N/A
|
N/A
|
100,204
|
N/A
|
89,403
|
N/A
|
N/A
|
|
Invesco Real Estate Fund
|
1,426,610
|
N/A
|
N/A
|
208,998
|
N/A
|
414,707
|
N/A
|
48,170
|
|
Invesco Short Duration Inflation Protected Fund
|
398,079
|
$17,131
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Invesco Short Term Bond Fund
|
1,705,976
|
N/A
|
N/A
|
533,841*
|
N/A
|
212,235
|
N/A
|
N/A
|
|
Invesco U.S. Government Money Portfolio
|
N/A
|
N/A
|
N/A
|
73,923
|
N/A
|
48,881
|
79,813
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
* Net of 12b-1 fee waiver.
|
|
|
|
|
|
|
|
|
For the fiscal year ended February 29, 2024, there were unreimbursed distribution-related expenses with respect to the following Fund:
|
Fund
|
Class C Shares
|
|
Invesco Corporate Bond Fund
|
$16,674
|
N-1
APPENDIX O - ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS
An estimate by category of the allocation of actual fees paid by Class A shares of the Funds during the fiscal year or periods, as applicable, ended February 29, 2024, follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Corporate Bond Fund
|
$0
|
$0
|
$0
|
$0
|
$2,605,909
|
$0
|
$0
|
|
Invesco Global Real Estate Fund
|
0
|
0
|
0
|
0
|
187,788
|
0
|
0
|
|
Invesco Government Money Market Fund
|
0
|
0
|
0
|
0
|
672,740
|
0
|
0
|
|
Invesco High Yield Fund
|
0
|
0
|
0
|
0
|
1,374,360
|
0
|
0
|
|
Invesco Income Fund
|
0
|
0
|
0
|
0
|
611,503
|
0
|
0
|
|
Invesco Intermediate Bond Factor Fund
|
0
|
0
|
0
|
0
|
232,705
|
0
|
0
|
|
Invesco Real Estate Fund
|
0
|
0
|
0
|
0
|
1,426,610
|
0
|
0
|
|
Invesco Short Duration Inflation Protected Fund
|
0
|
0
|
0
|
0
|
398,079
|
0
|
0
|
|
Invesco Short Term Bond Fund
|
0
|
0
|
0
|
0
|
1,705,976
|
0
|
0
|
An estimate by category of the allocation of actual fees paid by Class A2 shares of
Invesco Short Duration Inflation Protected Fund during the year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Short Duration Inflation Protected Fund
|
$0
|
$0
|
$0
|
$0
|
$17,131
|
$0
|
$0
|
An estimate by category of the allocation of actual fees paid by Class AX Shares of
Invesco Government Money Market Fund during the fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Government Money Market Fund
|
$0
|
$0
|
$0
|
$0
|
$93,424
|
$0
|
$0
|
An estimate by category of the allocation of actual fees paid by Class C Shares of
the Funds during the fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Corporate Bond Fund
|
$276
|
$212
|
$312
|
$25,044
|
$302,944
|
$2,599
|
$105
|
|
Invesco Global Real Estate Fund
|
16
|
12
|
18
|
1,448
|
31,545
|
151
|
6
|
|
Invesco Government Money Market Fund
|
1,581
|
1,218
|
1,758
|
95,143
|
889,608
|
14,807
|
599
|
|
Invesco High Yield Fund
|
100
|
86
|
130
|
10,090
|
154,471
|
1,042
|
42
|
|
Invesco Income Fund
|
61
|
45
|
67
|
5,404
|
38,085
|
562
|
23
|
|
Invesco Intermediate Bond Factor Fund
|
70
|
61
|
101
|
7,474
|
91,695
|
772
|
31
|
|
Invesco Real Estate Fund
|
145
|
106
|
150
|
12,383
|
194,876
|
1,286
|
52
|
|
Invesco Short Term Bond Fund*
|
570
|
418
|
585
|
16,264
|
510,721
|
5,077
|
206
|
|
Invesco U.S. Government Money Portfolio
|
132
|
98
|
139
|
11,496
|
60,813
|
1,197
|
48
|
* Net of 12b-1 fee waiver.
An estimate by category of the allocation of actual fees paid by Class CX shares of
Invesco Government Money Market Fund during the fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Government Money Market Fund
|
$9
|
$7
|
$10
|
$705
|
$975
|
$85
|
$3
|
O-1
An estimate by category of the allocation of actual fees paid by Class R Shares of
the Funds during the fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Corporate Bond Fund
|
$17
|
$13
|
$19
|
$510
|
$67,253
|
$159
|
$6
|
|
Invesco Global Real Estate Fund
|
63
|
49
|
64
|
1,848
|
100,483
|
576
|
23
|
|
Invesco Government Money Market Fund
|
510
|
399
|
580
|
9,352
|
725,919
|
4,846
|
196
|
|
Invesco Income Fund
|
3
|
3
|
4
|
113
|
21,830
|
35
|
1
|
|
Invesco Intermediate Bond Factor Fund
|
32
|
24
|
33
|
910
|
88,110
|
282
|
12
|
|
Invesco Real Estate Fund
|
77
|
57
|
80
|
2,220
|
411,552
|
693
|
28
|
|
Invesco Short Term Bond Fund
|
130
|
98
|
140
|
3,801
|
206,842
|
1,176
|
48
|
|
Invesco U.S. Government Money Portfolio
|
67
|
55
|
83
|
2,167
|
45,810
|
672
|
27
|
An estimate by category of the allocation of actual fees paid by Investor Class shares
of the Funds during the fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco High Yield Fund
|
$0
|
$0
|
$0
|
$0
|
$142,421
|
$0
|
$0
|
|
Invesco Income Fund
|
0
|
0
|
0
|
0
|
18,350
|
0
|
0
|
|
Invesco Real Estate Fund
|
0
|
0
|
0
|
0
|
48,170
|
0
|
0
|
An estimate by category of the allocation of actual fees paid by Invesco Cash Reserve
shares of Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio during the
fiscal year ended February 29, 2024 follows:
|
|
Advertising
|
Printing
& Mailing
|
Seminars
|
Underwriters
Compensation
|
Dealers
Compensation
|
Personnel
|
Travel
Relating to
Marketing
|
|
Invesco Government Money Market Fund
|
$0
|
$0
|
$0
|
$0
|
$ 5,590,643
|
$0
|
$0
|
|
Invesco U.S. Government Money Portfolio
|
0
|
0
|
0
|
0
|
79,813
|
0
|
0
|
O-2
STATEMENT OF ADDITIONAL INFORMATION
Dated June 28, 2024
AIM Investment Securities Funds (Invesco Investment Securities Funds)
This Statement of Additional Information (the SAI) relates to the portfolio (the Fund)
of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the Trust) listed below.
|
Fund
|
|
Invesco SMA High Yield Bond Fund
|
This SAI is not a Prospectus, and it should be read in conjunction with the Prospectus
for the Fund listed above. Portions of the Fund's financial statements are incorporated into this SAI by reference to the
Fund's most recent shareholder report for its fiscal year ended February 29, 2024. You may obtain, without charge, a copy of any Prospectus and/or shareholder report for the Fund listed
above from an authorized dealer or by writing to:
Invesco Investment Services, Inc.
P.O. Box 219078
Kansas City, MO 64121-9078
P.O. Box 219078
Kansas City, MO 64121-9078
or by calling (800) 959-4246
or on the Internet: www.invesco.com/us
Shares of the Fund may be purchased and held by or on behalf of wrap fee, separately
managed and other discretionary accounts (SMAs) for which Invesco Advisers, Inc. (Invesco or the
Adviser) or its affiliates have an agreement with a program sponsor or directly with the client, to
provide management or advisory services to the account.
SMAHYB-SOAI-1
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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Page
|
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4
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9
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20
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20
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21
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53
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58
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71
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71
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72
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72
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i
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Page
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115
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115
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115
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A-1
|
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B-1
|
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C-1
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D-1
|
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E-1
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F-1
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G-1
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H-1
|
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I-1
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J-1
|
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K-1
|
ii
GENERAL INFORMATION ABOUT THE TRUST
Fund History
AIM Investment Securities Funds (Invesco Investment Securities Funds) (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. The Trust was originally organized
as a Maryland corporation on November 4, 1988. Under the Trust’s Agreement and Declaration of Trust, as amended, (the Trust Agreement), the Board of Trustees of the Trust (the Board) is authorized to
create new series of shares without the necessity of a vote of shareholders of the Trust.
Prior to April 30, 2010, the Trust was known as AIM Investment Securities Funds.
Shares of Beneficial Interest
Shares of beneficial interest of the Trust are redeemable at their net asset value
at the option of the shareholder or at the option of the Trust, in accordance with any applicable provisions
of the Trust Agreement and applicable law, subject in certain circumstances to a contingent deferred sales
charge, if applicable.
The Trust allocates cash and property it receives from the issue or sale of shares,
together with all assets in which such consideration is invested or reinvested, all income, earnings, profits
and proceeds thereof, to the Fund, subject only to the rights of creditors of the Fund. These assets constitute
the assets belonging to the Fund, are segregated on the Trust’s books, and are charged with the liabilities and expenses of the Fund and its classes. The Trust allocates any general liabilities and expenses of the Trust
not readily identifiable as belonging to the Fund primarily on the basis of relative net assets or other relevant
factors, subject to oversight by the Board.
Each share of the Fund represents an equal pro rata interest in the Fund with each
other share and is entitled to dividends and other distributions with respect to the Fund, which may
be from income, capital gains, capital or distributions in kind, as declared by the Board.
If the Fund offers separate classes of shares, each class of shares of the Fund represents
a proportionate undivided interest in the net assets belonging to the Fund. Differing sales charges
and expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of
the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the Fund
allocable to such class available for distribution after satisfaction of, or reasonable provision for, the
outstanding liabilities of the Fund allocable to such class. The Fund does not currently offer different classes of shares.
The Trust Agreement provides that each shareholder, by virtue of having become a shareholder
of the Trust, is bound by terms of the Trust Agreement and the Trust’s Bylaws. Ownership of shares does not make shareholders third party beneficiaries of any contract entered into by the Trust.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings
of shareholders of the Fund or class, if applicable, will be held for any purpose determined by the Board,
including from time to time to consider matters requiring a vote of such shareholders in accordance with
the requirements of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that
shareholder meetings will be held annually.
The Trust Agreement provides that the Board may authorize (i) a merger, consolidation
or sale of assets (including, but not limited to, mergers, consolidations or sales of assets between
two Funds, or between the Fund and a series of any other registered investment company), and (ii) the combination
of two or more classes of shares of the Fund into a single class, each without shareholder approval
but subject to applicable requirements under the 1940 Act and state law.
Each share of the Fund generally has the same voting, dividend, liquidation and other
rights; however, if the Fund is divided into separate classes, each class of shares of the Fund would
be subject to different sales loads, conversion features, exchange privileges and class-specific expenses, as applicable.
1
Except as specifically noted above, shareholders of the Fund are entitled to one vote
per share (with proportionate voting for fractional shares), irrespective of the relative net asset
value of the shares of the Fund. However, on matters affecting an individual Fund or class of shares, a separate
vote of shareholders of the Fund or class is required. Shareholders of the Fund or class are not entitled
to vote on any matter which does not affect the Fund or class but that requires a separate vote of another Fund
or class. An example of a matter that would be voted on separately by shareholders of the Fund is the approval
of the advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco).
When issued, shares of the Fund are fully paid and nonassessable, have no preemptive
or subscription rights, and are freely transferable. Shares do not have cumulative voting rights in
connection with the election of Trustees or on any other matter.
Under Delaware law, shareholders of a Delaware statutory trust shall be entitled to
the same limitation of personal liability extended to shareholders of private for-profit corporations organized
under Delaware law. There is a remote possibility, however, that shareholders could, under certain circumstances,
be held liable for the obligations of the Trust to the extent the courts of another state, which does
not recognize such limited liability, were to apply the laws of such state to a controversy involving such obligations.
The Trust Agreement disclaims shareholder personal liability for the debts, liabilities, obligations and
expenses of the Trust and requires that every undertaking of the Trust or the Board relating to the Trust or
the Fund include a recitation limiting such obligation to the Trust and its assets or to the Fund and the assets
belonging thereto. The Trust Agreement provides for indemnification out of the property of the Fund (or class,
as applicable) for all losses and expenses of any shareholder of such Fund held personally liable solely on account
of being or having been a shareholder.
The trustees and officers of the Trust will not be liable for any act, omission or
obligation of the Trust or any trustee or officer; however, a trustee or officer is not protected against any
liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct
of his or her office with the Trust or the Fund (Disabling Conduct). The Trust’s Bylaws generally provide for indemnification by the Trust of the trustees, officers and employees or agents of the Trust, provided that such persons
have not engaged in Disabling Conduct. Indemnification does not extend to judgments or amounts paid in
settlement in any actions by or in the right of the Trust. The Trust Agreement also authorizes the purchase
of liability insurance on behalf of trustees and officers with Fund assets. The Trust’s Bylaws provide for the advancement of payments of expenses to current and former trustees, officers and employees or agents of the
Trust, or anyone serving at their request, in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding, for which such person would be entitled to indemnification; provided that
any advancement of expenses would be reimbursed unless it is ultimately determined that such person is
entitled to indemnification for such expenses.
The Trust Agreement provides that any Trustee who serves as chair of the Board, a
member or chair of a committee of the Board, lead independent Trustee, or an expert on any topic or in
any area (including an audit committee financial expert), or in any other special appointment will not be subject
to any greater standard of care or liability because of such position.
The Trust Agreement provides a detailed process for the bringing of derivative actions
by shareholders. A shareholder may only bring a derivative action on behalf of the Trust if certain conditions
are met. Among other things, such conditions: (i) require shareholder(s) to make a pre-suit demand
on the Trustees (unless such effort is not likely to succeed because a majority of the Board or the committee
established to consider the merits of such action are not independent Trustees under Delaware law); (ii) require
10% of the beneficial owners to join in the pre-suit demand, or if a pre-suit demand is not required, require
10% of beneficial owners to join in the demand for the Board to commence such action; and (iii) afford
the Trustees a reasonable amount of time to consider the request and investigate the basis of the
claims (including designating a committee to consider the demand and hiring counsel or other advisers).
These conditions generally are intended to provide the Trustees with the ability to pursue a claim
if they believe doing so would be in the best interests of the Trust and its shareholders and to preclude the pursuit
of claims that the
2
Trustees determine to be without merit or otherwise not in the Trust’s best interest to pursue. Insofar as the federal securities laws supersede state law, these provisions do not apply to shareholder
derivative claims that arise under the federal securities laws.
The Trust Agreement also generally requires that actions by shareholders in connection
with or against the Trust or the Fund be brought only in certain Delaware courts, provided that actions
arising under the U.S. federal securities laws are required to be brought in the United States District Court
for the Southern District of New York and that the right to jury trial be waived to the fullest extent permitted
by law. These provisions may result in increased shareholder costs in pursuing a shareholder derivative claim
and/or may limit a shareholder's ability to bring a claim in a different forum.
Share Certificates
Shareholders of the Fund do not have the right to demand or require the Trust to issue
share certificates and share certificates are not issued. Any certificate previously issued with respect
to any shares is deemed to be cancelled without any requirement for surrender to the Trust.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
Classification
The Trust is an open-end management investment company. The Fund is classified as “diversified” for purposes of the 1940 Act.
Investment Strategies and Risks
Set forth below are detailed descriptions of the various types of securities and investment
techniques that Invesco and/or the Sub-Advisers (as defined herein) may use in managing the Fund,
as well as the risks associated with those types of securities and investment techniques. The descriptions
of the types of securities and investment techniques below supplement the discussion of principal
investment strategies and risks contained in the Fund's Prospectus. Where a particular type of security or investment
technique is not discussed in the Fund’s Prospectus, that security or investment technique is not a principal investment strategy.
The Fund may invest in all of the following types of investments (unless otherwise
indicated). The Fund might not invest in all of these types of securities or use all of these techniques
at any one time. Invesco and/or the Sub-Advisers may invest in other types of securities and may use other
investment techniques in managing the Fund as well as securities and techniques not described. The Fund’s transactions in a particular type of security or use of a particular technique are subject to limitations imposed by the Fund’s investment objective, policies and restrictions described in the Fund’s Prospectus and/or this SAI, as well as the federal securities laws.
Unless the Fund’s prospectus or this SAI states that a percentage limitation or fundamental or non-fundamental restriction applies on an ongoing basis, it applies only at the time the Fund makes
an investment. That means the Fund is not required to sell securities to meet the percentage limits
or investment restrictions if the value of the investment increases in proportion to the size of the Fund. Percentage
limits on borrowing and illiquid investments apply on an ongoing basis.
The Fund's investment objectives, policies, strategies and practices described below
are non-fundamental and may be changed without approval of the holders of the Fund's voting securities,
unless otherwise indicated.
Incidental to its investment activities, although the Fund has a principal investment
strategy of primarily investing in fixed income securities, the Fund may acquire equity securities (including
common stocks, preferred stocks, convertible securities, warrants and rights) or other investments
that the Fund ordinarily would not purchase, in connection with a bankruptcy, restructuring, workout or other
extraordinary event concerning a particular portfolio investment. To the extent the Fund acquires equity
securities or investments as described above, it may also purchase additional equity securities or investments
of those issuers.
3
Equity Investments
Common Stock. Common stock is issued by a company principally to raise cash for business purposes
and represents an equity or ownership interest in the issuing company. Common stockholders
are typically entitled to vote on important matters of the issuing company, including the selection
of directors, and may receive dividends on their holdings. The Fund participates in the success or failure
of any company in which it holds common stock. In the event a company is liquidated or declares bankruptcy, the
claims of bondholders, other debt holders, owners of preferred stock and general creditors take precedence
over the claims of those who own common stock.
The prices of common stocks change in response to many factors including the historical
and prospective earnings of the issuing company, the value of its assets, general economic conditions,
interest rates, investor perceptions and market liquidity.
Over-the-Counter Securities. Securities of small- and mid-capitalization issuers may be traded on securities exchanges or in the over-the-counter market. The over-the-counter markets,
both in the U.S. and abroad, may have less liquidity than securities exchanges. That lack of liquidity
can affect the price the Fund is able to obtain when it wants to sell a security, because if there are fewer buyers
and less demand for a particular security, the Fund might not be able to sell it at an acceptable price
or might have to reduce the price in writing in order to dispose of the security. There are a number of over-the-counter
markets in the U.S., as well as those abroad, as long as a dealer is willing to make a market in a particular
security.
Preferred Stock. Preferred stock, unlike common stock, often offers a specified dividend rate payable
from a company’s earnings. Preferred stock also generally has a preference over common stock on the distribution of a company’s assets in the event the company is liquidated or declares bankruptcy; however, the rights of preferred stockholders on the distribution of a company’s assets in the event of a liquidation or bankruptcy are generally subordinate to the rights of the company’s debt holders and general creditors. If interest rates rise, the fixed dividend on preferred stocks may be less attractive,
causing the price of preferred stocks to decline.
Some fixed rate preferred stock may have mandatory sinking fund provisions which provide
for the stock to be retired or redeemed on a predetermined schedule, as well as call/redemption
provisions prior to maturity, which can limit the benefit of any decline in interest rates that might
positively affect the price of preferred stocks. Preferred stock dividends may be “cumulative,” requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer’s common stock. Preferred stock may be “participating,” which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means
that the interest to be paid is set by auction and will often be reset at stated intervals.
Small- and Mid-Capitalization Companies. Small-capitalization (small-cap) companies may be either established or newer companies, including “unseasoned” companies that have typically been in operation for less than three years. Mid-capitalization (mid-cap) companies are generally companies
that have completed their initial start-up cycle, and in many cases have established markets and developed
seasoned market teams. While smaller companies might offer greater opportunities for gain than larger
companies, they also involve greater risk of loss. They may be more sensitive to changes in a company’s earnings expectations and may experience more abrupt and erratic price movements. Small- and mid-cap companies’ securities often trade in lower volumes and in many instances, are traded over-the-counter or
on a regional securities exchange, where the frequency and volume of trading is substantially less than is
typical for securities of larger companies traded on national securities exchanges. Therefore, the securities
of smaller companies may be subject to wider price fluctuations and it might be harder for the Fund to
dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-cap companies may not
have established markets for their products or services and may have fewer customers and product lines.
They may have more limited access to financial resources and may not have the financial strength to sustain
them through business downturns or adverse market conditions. Since small- and mid-cap companies
typically reinvest a high proportion of their earnings in their business, they may not pay dividends for
some time, particularly if they are newer companies. Small- and mid-cap companies may have unseasoned management
or less depth
4
in management skill than larger, more established companies. They may be more reliant
on the efforts of particular members of their management team and management changes may pose a greater
risk to the success of the business. Securities of small, unseasoned companies may be particularly
volatile, especially in the short-term, and may have very limited liquidity in a declining market. It may
take a substantial period of time to realize a gain on an investment in a small- or mid-cap company, if any gain
is realized at all.
When the Fund invests in smaller company securities that might trade infrequently,
investors might seek to trade Fund shares based on their knowledge or understanding of the value of those
securities (this is sometimes referred to as “price arbitrage”). If such price arbitrage were successful, it might interfere with the efficient management of the Fund’s portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that
activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.
Equity-Linked Securities. Equity-linked securities are instruments whose value is based upon the value of one or more underlying equity securities, a reference rate or an index. Equity-linked
securities come in many forms and may include features, among others, such as the following: (i) may
be issued by the issuer of the underlying equity security or by a company other than the one to which the instrument
is linked (usually an investment bank), (ii) may convert into equity securities, such as common stock, within
a stated period from the issue date or may be redeemed for cash or some combination of cash and the linked
security at a value based upon the value of the underlying equity security within a stated period from
the issue date, (iii) may have various conversion features prior to maturity at the option of the holder or
the issuer or both, (iv) may limit the appreciation value with caps or collars of the value of the underlying equity
security and (v) may have fixed, variable or no interest payments during the life of the security which reflect
the actual or a structured return relative to the underlying dividends of the linked equity security. Investments
in equity-linked securities may subject a Fund to additional risks not ordinarily associated with investments
in other equity securities. Because equity-linked securities are sometimes issued by a third party other than
the issuer of the linked security, a Fund is subject to risks if the underlying equity security, reference
rate or index underperforms or if the issuer defaults on the payment of the dividend or the common stock at maturity.
In addition, the trading market for particular equity-linked securities may be less liquid, making it difficult
for a Fund to dispose of a particular security when necessary and reduced liquidity in the secondary market for
any such securities may make it more difficult to obtain market quotations for valuing the Fund’s portfolio.
Convertible Securities. Convertible securities are generally bonds, debentures, notes, preferred stocks or other securities or investments that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value)
at a stated exchange ratio or predetermined price (the conversion price). A convertible security is designed
to provide current income and also the potential for capital appreciation through the conversion feature, which
enables the holder to benefit from increases in the market price of the underlying common stock. A convertible
security may be called for redemption or conversion by the issuer after a particular date and under
certain circumstances (including a specified price) established upon issue. If a convertible security held
by the Fund is called for redemption or conversion, the Fund could be required to tender it for redemption,
convert it into the underlying common stock, or sell it to a third party, which may have an adverse effect on the Fund’s ability to achieve its investment objectives. Convertible securities have general characteristics similar
to both debt and equity securities.
A convertible security generally entitles the holder to receive interest paid or accrued
until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to non-convertible debt obligations and are designed to provide
for a stable stream of income with generally higher yields than common stocks. However, there can be no assurance
of current income because the issuers of the convertible securities may default on their obligations.
Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities entail more risk than its debt obligations. Moreover, convertible securities are often rated below investment grade
or not rated because they fall below debt obligations and just above common stock in order of preference or priority on an issuer’s
5
balance sheet. To the extent that the Fund invests in convertible securities with
credit ratings below investment grade, such securities may have a higher likelihood of default, although
this may be somewhat offset by the convertibility feature.
Convertible securities generally offer lower interest or dividend yields than non-convertible
debt securities of similar credit quality because of the potential for capital appreciation. The common
stock underlying convertible securities may be issued by a different entity than the issuer of the
convertible securities.
The value of convertible securities is influenced by both the yield of non-convertible
securities of comparable issuers and by the value of the underlying common stock. The value of a
convertible security viewed without regard to its conversion feature (i.e., strictly on the basis of its
yield) is sometimes referred to as its “investment value.” The investment value of the convertible security typically will fluctuate based on the credit quality of the issuer and will fluctuate inversely with changes in prevailing
interest rates. However, at the same time, the convertible security will be influenced by its “conversion value,” which is the market value of the underlying common stock that would be obtained if the convertible security were
converted. Conversion value fluctuates directly with the price of the underlying common stock, and will
therefore be subject to risks relating to the activities of the issuer and general market and economic conditions.
Depending upon the relationship of the conversion price to the market value of the underlying security,
a convertible security may trade more like an equity security than a debt instrument.
The Fund will invest in convertible securities based primarily on the characteristics
of the equity security into which it converts, and without regard to the credit rating of the convertible
security (even if the credit rating is below investment grade). To the extent that the Fund invests in convertible
securities with credit ratings below investment grade, such securities may have a higher likelihood of default,
although this may be somewhat offset by the convertibility feature. See also “Debt Investments-Non-Investment Grade Debt Obligations (Junk Bonds)” below.
If, because of a low price of the common stock, the conversion value is substantially
below the investment value of the convertible security, the price of the convertible security is governed
principally by its investment value. Generally, if the conversion value of a convertible security increases to a
point that approximates or exceeds its investment value, the value of the security will be principally influenced
by its conversion value. A convertible security will sell at a premium over its conversion value to the extent
investors place value on the right to acquire the underlying common stock while holding an income-producing security.
While the Fund uses the same criteria to rate a convertible debt security that it
uses to rate a more conventional debt security, a convertible preferred stock is treated like a preferred stock for the Fund’s financial reporting, credit rating and investment limitation purposes.
Contingent Convertible Securities (CoCos). CoCos (also referred to as contingent capital securities) are a form of hybrid fixed income security typically issued by non-U.S. banks that may either
convert into common stock of the issuer or undergo a principal write-down by a predetermined percentage
upon the occurrence of a “trigger” event, such as if (a) the issuer’s capital ratio falls below a specified level or (b) certain regulatory events, such as a change in regulatory capital requirements, affect the issuer’s continued viability. Unlike traditional convertible securities, the conversion is not voluntary and the equity
conversion or principal write-down features are tailored to the issuing banking institution and its regulatory requirements.
In certain circumstances, CoCos may be automatically written down to zero, thereby cancelling
the securities, and investors (including a Fund) could lose the entire value of their investment even
as the issuer remains in business. If such an event occurs, an investor may not have any rights to repayment
of the principal amount of the securities that has not become due. Additionally, an investor may not be able
to collect interest payments or dividends on such securities.
CoCos are subject to credit, interest rate and market risks associated with fixed
income and equity securities generally, along with risks typically applicable to convertible securities.
CoCos are also subject to loss absorption risk because coupon payments can potentially be cancelled or deferred at the issuer’s discretion or at the request of the relevant regulatory authority in order to help
the bank absorb losses. Additionally, certain call provisions permit an issuer to repurchase CoCos if the
regulatory environment or tax
6
treatment of the security (e.g., tax deductibility of interest payments) changes.
This may result in a potential loss to the Fund if the price at which the issuer calls or repurchases the CoCos is
lower than the initial purchase price by the Fund.
CoCos are subordinate in rank to traditional convertible securities and other debt
obligations of an issuer in the issuer’s capital structure, and therefore, CoCos entail more risk than an issuer’s other debt obligations.
CoCos are generally speculative and their market value may fluctuate based on a number
of unpredictable factors, including, but not limited to, the creditworthiness of the
issuer and/or fluctuations in the issuer’s capital ratios, supply and demand for CoCos, general market conditions and available liquidity, and economic, financial and political events affecting the particular issuer or markets
in general.
Enhanced Convertible Securities. “Enhanced” convertible securities are equity-linked hybrid securities that automatically convert to equity securities on a specified date. Enhanced convertibles
have been designed with a variety of payoff structures, and are known by a variety of different names.
Three features common to enhanced convertible securities are (i) conversion to equity securities at the maturity
of the convertible (as opposed to conversion at the option of the security holder in the case of ordinary
convertibles); (ii) capped or limited appreciation potential relative to the underlying common stock; and (iii)
dividend yields that are typically higher than that on the underlying common stock. Thus, enhanced convertible
securities offer holders the opportunity to obtain higher current income than would be available from a traditional
equity security issued by the same company in return for reduced participation in the appreciation
potential of the underlying common stock. Other forms of enhanced convertible securities may involve arrangements
with no interest or dividend payments made until maturity of the security or an enhanced principal amount
received at maturity based on the yield and value of the underlying equity security during the security’s term or at maturity.
Synthetic Convertible Securities. A synthetic convertible security is a derivative position composed of two or more distinct securities whose investment characteristics, taken together, resemble
those of traditional convertible securities, i.e., fixed income and the right to acquire the underlying
equity security. For example, a Fund may purchase a non-convertible debt security and a warrant or option, which enables
a Fund to have a convertible-like position with respect to a security or index.
Synthetic convertibles are typically offered by financial institutions in private
placement transactions and are typically sold back to the offering institution. Upon conversion, the holder generally
receives from the offering institution an amount in cash equal to the difference between the conversion
price and the then-current value of the underlying security. Synthetic convertible securities differ from true
convertible securities in several respects. The value of a synthetic convertible is the sum of the values
of its fixed-income component and its convertibility component. Thus, the values of a synthetic convertible
and a true convertible security will respond differently to market fluctuations. Purchasing a synthetic convertible
security may provide greater flexibility than purchasing a traditional convertible security, including
the ability to combine components representing distinct issuers, or to combine a fixed income security with
a call option on a stock index, when the Adviser determines that such a combination would better further a Fund’s investment goals. In addition, the component parts of a synthetic convertible security may be purchased
simultaneously or separately.
The holder of a synthetic convertible faces the risk that the price of the stock or
the level of the market index underlying the convertibility component will decline. In addition, in purchasing
a synthetic convertible security, a Fund may have counterparty risk with respect to the financial institution
or investment bank that offers the instrument.
Alternative Entity Securities. Alternative entity securities, which are the securities of entities that are formed as limited partnerships, limited liability companies, business trusts or other
non-corporate entities that are similar to common or preferred stock of corporations.
Initial Public Offerings. Initial Public Offerings (IPOs) of securities issued by unseasoned companies with little or no operating history are risky and their prices are highly volatile,
but they can result in very large gains in their initial trading. Attractive IPOs are often oversubscribed and may not
be available to the Fund, or only in very limited quantities. Thus, when the Fund’s size is smaller, any gains from IPOs will have an
7
exaggerated impact on the Fund’s reported performance than when the Fund is larger. The Fund may engage in short-term trading in connection with its IPO investments, which could produce
higher trading costs and adverse tax consequences. There can be no assurance that the Fund will have favorable
IPO investment opportunities.
Special Purpose Acquisition Companies. Special purpose acquisition companies (“SPACs”) are investment entities, acquired through stocks, warrants and other securities, that
pool funds to seek potential acquisition or merger opportunities. A SPAC is a publicly traded company that raises
funds through an initial public offering (“IPO”) for the purpose of acquiring or merging with another company to be identified subsequent to the SPAC’s IPO. The securities of a SPAC are often issued in “units” that include one share of common stock and one right or warrant (or partial right or warrant) conveying the
right to purchase additional common shares or partial shares of the SPAC. In some cases, the rights and warrants
may be separated from the common stock at the election of the holder, after which they may become freely
tradeable. If the Fund purchases shares of a SPAC in an IPO it will generally bear a sales commission, which
may be significant.
Unless and until a business combination transaction is completed, a SPAC generally
invests its assets (which are constituted solely by the proceeds of the IPO), less a portion retained
to cover expenses, in U.S. government securities, money market funds and similar investments whose returns or
yields may be significantly lower than those of the Fund’s other investments. If an acquisition or merger that meets the requirements for the SPAC is not completed within a pre-established period of time,
the invested funds are returned to the SPAC’s shareholders, less certain permitted expenses, and any rights or warrants issued by the SPAC will expire worthless. Under any circumstances in which the Fund receives
a refund of all or a portion of its original investment in a SPAC, the returns on that investment may be
negligible, and the Fund may be subject to opportunity costs to the extent that alternative investments would
have produced higher returns. Further, the Fund may be delayed in receiving any redemption or liquidation
proceeds from a SPAC to which it is entitled.
Because SPACs are in essence “blank check” companies without operating histories or ongoing business operations (other than identifying and pursuing acquisition or merger opportunities),
the potential for the long term capital appreciation of their securities is dependent on the ability of the SPAC’s sponsor to identify and complete a profitable business combination. There is no guarantee that the SPACs in
which the Fund invests will complete a business combination or that any transaction completed by the SPACs
in which the Fund invests will be profitable. Even if a SPAC in which the Fund has invested identifies
a desirable acquisition or merger target and reaches agreement with that company as to the terms of the business
combination, there can be no guarantee that the transaction will ultimately be consummated because, among
other conditions that must be satisfied, a requisite number of shareholders of the SPAC or of the target
company do not vote in favor of the transaction. The values of investments in SPACs may be highly volatile
and may depreciate significantly over time. Some SPACs may pursue acquisitions or mergers only within
certain industries or regions, which may ultimately lead to an increase in the volatility of their prices
following completion of a business combination. In addition, some of these securities may be considered illiquid
and/or subject to restrictions on resale, leaving the Fund unable to sell its interest in a SPAC or
able to sell its interest only at a price below what that Fund believes is the SPAC interest’s intrinsic value. Additionally, an investment in a SPAC may be diluted by additional later offerings of interests in the SPAC or by other
investors exercising their warrants to purchase shares of the SPAC.
Due to the risk of the loss of sponsors’ and other initial investors’ capital if an acquisition or merger is not consummated, sponsors of SPACs may be incentivized to consummate business combinations
at less attractive valuations at the expense of SPAC shareholders. In addition, as the number
of SPACs grows, there is greater competition among SPACs and traditional purchasers of companies, which
further increases the likelihood that SPAC sponsors may be incentivized to consummate acquisitions or mergers
at less attractive valuations, as well as the risk that SPACs cannot successfully complete business combinations. In addition, recent regulations promulgated by the SEC impose additional disclosure obligations
and other requirements on SPACs and may impact the ability of a SPAC to conduct its operations.
8
Equity-Linked Notes (ELNs). ELNs are hybrid derivative-type instruments, in a single note form, that are specially designed to combine the characteristics of one or more reference securities
(such as a single stock, exchange-traded fund, exchange-traded note, or an index or basket of securities (underlying
securities)) and a related equity derivative, such as a put or call option. Generally, when purchasing
an ELN, a Fund pays the counterparty the current value of the underlying securities plus a commission. Upon
the maturity of the note, the Fund generally receives the par value of the note plus a return based on the appreciation
of the underlying securities. A Fund may or may not hold an ELN until its maturity. If the
underlying securities have depreciated in value or if their price fluctuates outside of a preset range, depending
on the type of ELN, the Fund may receive only the principal amount of the note, or may lose the entire principal
invested in the ELN. ELNs are available with an assortment of features, including periodic coupon payments;
limitations on participation in the appreciation of the underlying securities; and different protection levels on the Fund’s principal investment. A Fund will only invest in ELNs for which the underlying security
is a permissible investment for the Fund in accordance with its investment policies and restrictions.
ELNs are generally in two types: (1) those that provide for protection of a Fund’s principal in exchange for limited participation in the appreciation of the underlying securities, and (2) those that do not provide for such
protection and subject a Fund to the risk of loss of its principal investment.
Investments in ELNs possess the risks associated with the underlying securities, such
as management risk, market risk and, as applicable, foreign securities and currency risks. In addition,
as a note, ELNs are also subject to certain debt securities risks, such as interest rate and credit risk. An
investment in an ELN also bears the risk that the ELN issuer will default or become bankrupt. In such an event,
the Fund may have difficulty being repaid, or fail to be repaid, the principal amount of, or income
from, its investment. ELNs may be structured to be subordinated or unsubordinated to other classes of debt holders'
right of payment. A downgrade or impairment to the credit rating of the issuer may also negatively impact
the price of the ELN. The Fund may also experience liquidity issues when investing in ELNs, as ELN transactions
generally take place in the over-the-counter institutional investment market as well as in privately
negotiated transactions with ELN issuers. The secondary market for ELNs may be limited, and the lack of liquidity
may make ELNs difficult to sell at a desirable time and price and value. ELNs may be subject to
resale restrictions such as those contained in Rule 144A promulgated under the Securities Act of 1933, as amended
(the 1933 Act). The price of an ELN may not correlate with the price of the underlying securities or a
fixed-income investment. As the holder of an ELN, the Fund generally has no rights to the underlying securities,
including no voting rights or rights to receive dividends. The Adviser’s ability to accurately forecast movements in the underlying securities will determine the success of the Fund’s ELNs investments. Should the prices of the underlying securities move in an unexpected manner, the Fund may not achieve the anticipated
benefits of its ELN investments, and it may realize losses, which could be significant and could include the Fund’s entire principal investment.
Foreign Investments
Foreign Securities. Foreign securities are equity or debt securities issued by issuers outside the United
States, and include securities in the form of American Depositary Receipts (ADRs),
European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) or other securities representing
underlying securities of foreign issuers (foreign securities). ADRs are receipts, issued by U.S. banks, for
the shares of foreign corporations, held by the bank issuing the receipt. ADRs are typically issued in registered
form, denominated in U.S. dollars and designed for use in the U.S. securities markets. GDRs are bank
certificates issued in more than one country for shares in a foreign company. The shares are held by a foreign
branch of an international bank. GDRs trade as domestic shares but are offered for sale globally through the
various bank branches. GDRs are typically used by private markets to raise capital and are denominated in
either U.S. dollars or foreign currencies. EDRs are similar to ADRs and GDRs, except they are typically issued
by European banks or trust companies, denominated in foreign currencies and designed for use outside
the U.S. securities markets. ADRs, EDRs and GDRs entitle the holder to all dividends and capital gains
on the underlying foreign securities, less any fees paid to the bank. Purchasing ADRs, EDRs or GDRs gives the
Fund the ability to purchase the functional equivalent of foreign securities without going to the foreign
securities markets to do so. ADRs, EDRs or GDRs that are “sponsored” are those where the foreign corporation whose shares are
9
represented by the ADR, EDR or GDR is actively involved in the issuance of the ADR,
EDR or GDR and generally provides material information about the corporation to the U.S. market. An “unsponsored” ADR, EDR or GDR program is one where the foreign corporation whose shares are held by the
bank is not obligated to disclose material information in the United States, and, therefore, the
market value of the ADR, EDR or GDR may not reflect important facts known only to the foreign company.
Foreign debt securities include corporate debt securities of foreign issuers, certain
foreign bank obligations (see “Bank Instruments”) and U.S. dollar or foreign currency denominated obligations of foreign governments or their subdivisions, agencies and instrumentalities (see “Foreign Government Obligations”), international agencies and supranational entities.
The Fund considers various factors when determining whether a company is in a particular
country or in a particular region/continent, including whether (1) it is organized under the laws
of a country or in a country in a particular region/continent; (2) it has a principal office in a country or in a
country in a particular region/continent; (3) it derives 50% or more of its total revenues from businesses
in a country or in a country in a particular region/continent; (4) its securities are traded principally on a security
exchange, or in an over-the-counter (OTC) market, in a particular country or in a country in a particular region/continent;
and/or (5) its “country of risk" as determined by a third party service provider such as Bloomberg. The issuer's “country of risk” is determined based on a number of criteria, including its country of domicile, the primary stock exchange on which it trades, the location from which the majority of its revenue comes, and
its reporting currency.
Investments by the Fund in foreign securities, including ADRs, EDRs and GDRs, whether
denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below in
addition to those accompanying an investment in issuers in the United States.
Currency Risk. The value in U.S. dollars of the Fund’s non-dollar-denominated foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign
security decreases when the value of the U.S. dollar rises against the foreign currency in which the security
is denominated and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many countries may not be as developed as that of the United States’ economy and may be subject to significantly different forces. Political, economic or social instability and development, expropriation or confiscatory taxation, and limitations
on the removal of funds or other assets could also adversely affect the value of portfolio investments. Certain
foreign companies may be subject to sanctions, embargoes, or other governmental actions that may impair or
otherwise limit the ability to invest in, receive, hold or sell the securities of such companies. These factors may
affect the value of investments in those companies. Certain companies may operate in, or have dealings
with, countries that the U.S. government has identified as state sponsors of terrorism. As a result, such companies
may be subject to specific constraints or regulations under U.S. law and, additionally, may be subject
to negative investor perception, either of which could adversely affect such companies' performance. Further,
war and military conflict between countries or in a region, for example the current conflicts in the
Ukraine and Middle East, may have an impact on the value of portfolio investments.
Regulatory Risk. Foreign companies may not be registered with the SEC and are generally not subject
to the regulatory controls and disclosure requirements imposed on U.S. issuers and, as
a consequence, there is generally less publicly available information about foreign securities than is available
about domestic securities. Foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards, corporate governance practices and requirements comparable to those applicable
to domestic companies. Therefore, financial information about foreign companies may be incomplete,
or may not be comparable to the information available on U.S. companies. Income from foreign securities
owned by the Fund may be reduced by a withholding tax at the source, which tax would reduce dividend
income payable to Fund shareholders.
There is generally less government supervision and regulation of securities exchanges,
brokers, dealers, and listed companies in foreign countries than in the U.S., thus increasing the risk
of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Foreign markets
may also have different
10
clearance and settlement procedures. If the Fund experiences settlement problems,
it may result in temporary periods when a portion of that Fund’s assets are uninvested and could cause it to miss attractive investment opportunities or create a potential liability to that Fund arising out of its inability
to fulfill a contract to sell such securities.
Market Risk. Investing in foreign markets generally involves certain risks not typically associated
with investing in the United States. The securities markets in many foreign countries will
have substantially lower trading volume than the U.S. markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than comparable domestic securities. Obtaining
and/or enforcing judgments in foreign countries may be more difficult, and there is generally less
government regulation and supervision of foreign stock exchanges, brokers and issuers, each of which may make
it more difficult to enforce contractual obligations. Increased custodian costs as well as administrative
costs (such as the need to use foreign custodians) may also be associated with the maintenance of assets in
foreign jurisdictions. In addition, transaction costs in foreign securities markets are likely to be higher,
since brokerage commission rates in foreign countries are likely to be higher than in the United States.
Risks of Developing/Emerging Market Countries. The Fund may invest in securities of companies located in developing and emerging markets countries subject to limits included in the Fund’s prospectus. Unless the Fund’s prospectus includes a different definition, the Fund considers developing and emerging market countries to be those countries that are (i) generally recognized to be an emerging
market country by the international financial community, including the World Bank, (ii) determined by the
Adviser to be an emerging market country or (iii) its “country of risk” is an emerging market country as determined by a third party service provider such as Bloomberg. As of the date of this SAI, the Adviser considers “emerging market countries” to generally include every country in the world except those countries included in the
MSCI World Index. The Adviser has broad discretion to identify countries that it considers to be emerging
market countries and may consider various factors in determining whether to classify a country as an emerging
market country, including a country’s relative interest rates, inflation rates, exchange rates, monetary and fiscal policies, trade and current account balances, legal and political developments and any other specific
factors the Adviser believes to be relevant. Because emerging market equity and emerging market debt are distinct
asset classes, a country may be deemed an emerging market country with respect to its equity only,
its debt only, both its equity and debt, or neither.
Investments in developing and emerging market countries present risks in addition
to, or greater than, those presented by investments in foreign issuers generally, and may include the following
risks:
i. Restriction, to varying degrees, on foreign investment in stocks;
ii. Repatriation of investment income, capital, and the proceeds of sales in foreign
countries may require foreign governmental registration and/or approval;
iii. Greater risk of fluctuation in the value of foreign investments due to changes
in currency exchange rates, currency control regulations or currency devaluation. In addition, there may
be higher rates of inflation and more rapid and extreme fluctuations in inflation rates and greater sensitivity
to interest rate changes;
iv. Inflation and rapid fluctuations in inflation rates may have negative effects
on the economies and securities markets of certain developing and emerging market countries;
v. Many of the developing and emerging market countries’ securities markets are relatively small or less diverse, have low trading volumes, suffer periods of relative illiquidity, and are
characterized by significant price volatility;
vi. There is a risk in developing and emerging market countries that a future economic
or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory
taxation, seizure, nationalization, or creation of government monopolies;
vii. Investments in such securities markets may be subject to unexpected market closures;
11
viii. The taxation systems at the federal, regional and local levels in developing
or emerging market countries may be less transparent and inconsistently enforced, and subject to sudden
change. Developing or emerging market countries may also have a higher degree of corruption
and fraud than developed market countries, as well as counterparties and financial institutions with
less financial sophistication, creditworthiness and/or resources;
ix. Less developed legal systems allowing for enforcement of private property rights
and/or redress for injuries to private property, such as bankruptcy. The ability to bring and enforce
actions in developing or emerging market countries, or to obtain information needed to pursue or enforce such
actions, may be limited and shareholder claims may be difficult or impossible to pursue; and
x. Less stringent regulatory, disclosure, financial reporting, accounting, auditing
and recordkeeping standards than companies in more developed countries and, as a result, the nature
and quality of such information may vary. Information about such companies may be less available and reliable
and, therefore, the ability to conduct adequate due diligence in developing or emerging
markets may be limited which can impede the Fund's ability to evaluate such companies. In addition,
certain developing or emerging market countries may impose material limitations on Public Company Accounting
Oversight Board (“PCAOB”) inspection, investigation and enforcement capabilities which can hinder the PCAOB’s ability to engage in independent oversight or inspection of accounting firms located
in or operating in certain developing or emerging markets. There is no guarantee that the quality of
financial reporting or the audits conducted by audit firms of developing or emerging market issuers meet
PCAOB standards.
Frontier Markets. The risks associated with investments in frontier market countries include all the
risks associated with investments in developing and emerging markets. These risks are magnified
for frontier market countries because frontier markets countries generally have smaller economies,
even less developed capital markets, and are traditionally less accessible than traditional emerging and
developing markets. As a result, investments in companies in frontier markets countries are generally subject
to a higher risk of loss than investments in companies in traditional emerging and developing market countries
due to less developed securities markets, different settlement procedures, greater price volatility, less
developed governments and economies, more government restrictions, and the limited ability of foreign entities
to participate in certain privatization programs. Investments in companies operating in frontier market countries
are highly speculative in nature.
Investing in Greater China Risk. Investments in companies located or operating in Greater China involve risks not associated with investments in Western nations, such as nationalization,
expropriation, or confiscation of property; lack of willingness or ability of the Chinese government
to support the economies and markets of the Greater China region; difficulty in obtaining and/or enforcing judgments;
lack of publicly available information; alteration or discontinuation of economic reforms; military
conflicts and the risk of war, either internal or with other countries; public health emergencies resulting in market
closures, travel restrictions, quarantines or other interventions; inflation, currency fluctuations
and fluctuations in inflation and interest rates that may have negative effects on the economy and securities markets
of Greater China; and Greater China’s dependency on the economies of other Asian countries, many of which are developing countries. Events in any one country within Greater China may impact the other countries
in the region or Greater China as a whole. For example, changes to their political and economic relationships
with the mainland China could adversely impact the Fund’s investments in Taiwan and Hong Kong.
Certain securities issued by companies located or operating in Greater China, such
as China A-shares, are subject to trading restrictions, quota limitations, and clearing and settlement
risks. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have
the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that
option in response to market volatility and other events. The liquidity of Chinese securities may shrink
or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse
investor perceptions, whether or not accurate.
Export growth continues to be a major driver of China’s rapid economic growth. As a result, a reduction in spending on Chinese products and services, the institution of tariffs, sanctions,
capital controls, embargoes,
12
trade wars, or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. The current political climate has intensified
concerns about a potential trade war between China and the United States, as each country has recently
imposed tariffs on the other country’s products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and
possible failure of individual companies and/or large segments of China’s export industry, which could have a negative impact on the Fund’s performance. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be
taken in the future. In addition, actions by the U.S. government, such as delisting of certain Chinese companies
from U.S. securities exchanges or otherwise restricting their operations in the United States, may negatively impact the value of such securities held by the Fund. Further, from time to time, certain companies in
which the Fund invests may operate in, or have dealings with, countries subject to sanctions or embargoes imposed
by the U.S. government and the United Nations and/or in countries the U.S. government identified
as state sponsors of terrorism. One or more of these companies may be subject to constraints under U.S.
law or regulations that could negatively affect the company’s performance.
Additionally, developing countries, such as those in Greater China, may subject the Fund’s investments to a number of tax rules, and the application of many of those rules may be uncertain.
Moreover, China has implemented a number of tax reforms in recent years, and may amend or revise its existing
tax laws and/or procedures in the future, possibly with retroactive effect. Changes in applicable
Chinese tax law could reduce the after-tax profits of the Fund, directly or indirectly, including by reducing the
after-tax profits of companies in China in which the Fund invests. Chinese taxes that may apply to the Fund’s investments include income tax or withholding tax on dividends, interest or gains earned by the Fund, business tax
and stamp duty. Uncertainties in Chinese tax rules could result in unexpected tax liabilities for
the Fund. Additionally, any difficulties of the PCAOB to inspect audit work papers and practices of PCAOB-registered
accounting firms in China with respect to their audit work of U.S. reporting companies may impose significant
additional risks associated with investments in China.
Risks of Investing in Chinese Variable Interest Entities. Many Chinese companies have created a special structure, which is based in China, known as a variable interest entity (“VIE”) as a means to circumvent limits on direct foreign ownership of equity in Chinese operating companies in certain sectors,
such as internet, media, education and telecommunications, imposed by the Chinese government. Typically
in such an arrangement, a China-based operating company establishes an offshore “holding” company in another jurisdiction that likely does not have the same disclosure, reporting, and governance
requirements as the United States. The holding company issues shares, i.e., is “listed”, on a foreign exchange such as the New York Stock Exchange or the Hong Kong Stock Exchange. The listed holding company enters
into service and other contracts with the China-based operating company, typically through the China-based
VIE. The VIE must be owned by Chinese nationals (and/or other Chinese companies), which often are the VIE’s founders, in order to obtain the licenses and/or assets required to operate in the restricted
or prohibited sector in China. The operations and financial position of the VIE are included in consolidated financial
statements of the listed holding company. Foreign investors, including mutual funds and ETFs (such as the Fund),
hold stock in the listed holding company rather than directly in the China-based operating company.
The VIE structure allows foreign shareholders to exert a degree of control and obtain
economic benefits arising from the operating company but without formal legal ownership because the listed holding company’s control over the operating company is predicated entirely on contracts with the VIE.
The listed holding company is distinct from the underlying operating company, and an investment in the
listed holding company represents exposure to a company that maintains service contracts with the operating
company, not equity ownership.
Investments in companies that use VIEs may pose additional risks because the investment
is made through the listed holding company’s service and other contractual arrangements with the underlying Chinese operating company. As a result, such investment may limit the rights of an investor
with respect to the underlying Chinese operating company. The contractual arrangements between the VIE
and the operating company may not be as effective in providing operational control as direct equity
ownership. The Chinese
13
government could determine at any time and without notice that the underlying contractual
arrangements on which control of the VIE is based violate Chinese law. While VIEs are a longstanding
industry practice, well known to Chinese officials and regulators, VIEs historically have not been formally
recognized under Chinese law. The owners of the VIE could decide to breach the contractual arrangements with
the listed holding company and it is uncertain whether the contractual arrangements, which may be subject
to conflicts of interest between the legal owners of the VIE and foreign investors, would be enforced
by Chinese courts or arbitration bodies. Prohibitions of these structures by the Chinese government, or
the inability to enforce such contracts, from which the shell company derives its value, would likely cause the
VIE-structured holding(s) to suffer significant, detrimental, and possibly permanent loss, and in turn, adversely affect the Fund’s returns and net asset value.
The Chinese government previously placed restrictions on China-based companies raising
capital offshore in certain sectors, including through VIEs, and investors face uncertainty
about future actions by the Chinese government that could significantly affect the operating company’s financial performance and the enforceability of the contractual arrangements underlying the VIE structure. It is
uncertain whether Chinese officials or regulators will withdraw their acceptance of the VIE structure, generally, or with respect to certain industries, or whether any new laws, rules or regulations relating to VIE structures will be adopted
and what impact such laws may have on foreign investors. There is a risk that China might prohibit
the existence of VIEs or sever their ability to transmit economic and governance rights to foreign
individuals and entities; if so, the market value of any associated portfolio holdings would likely suffer substantial,
detrimental, and possibly permanent loss.
Chinese companies, including those listed on U.S. exchanges, are generally not subject
to the same degree of regulatory requirements, accounting standards or auditor oversight as companies
in more developed countries. As a result, information about VIEs may be less reliable or complete.
Foreign companies with securities listed on U.S. exchanges, including those that utilize VIEs, may be
delisted if they do not meet the requirements of the listing exchange, the Public Company Accounting Oversight Board (“PCAOB”) and the U.S. government, which could significantly decrease the liquidity and value of such
securities. Actions by the U.S. government, such as delisting of certain Chinese companies from U.S. securities
exchanges or otherwise restricting their operations in the U.S., may negatively impact the liquidity
and value of such securities.
Risks of Investments in China A-shares through the Stock Connect Program. The Shanghai-Hong Kong Stock Connect program and the Shenzhen-Hong Kong Stock Connect program (both
programs collectively referred to as the Stock Connect Program) are securities trading and
clearing programs through which the Fund can trade eligible listed China A-shares. The Stock Connect Program
is subject to quota limitations, which may restrict or preclude a fund's ability to invest in Stock Connect
securities. Foreign investors, individually and in the aggregate, are subject to ownership limitations
from Shanghai or Shenzhen listed companies, including those purchased through the Stock Connect Program. Once
the daily quota is reached, orders to purchase additional China A-shares through the Stock Connect Program
will be rejected. Only certain China A-shares are eligible to be accessed through the Stock Connect
Program. Such securities may lose their eligibility at any time, in which case they could be sold but could
no longer be purchased through the Stock Connect Program. Because the Stock Connect Program is still relatively
in its early stages, the actual effect on the market for trading China A-shares with the introduction of
large numbers of foreign investors is currently unknown. The Stock Connect Program is subject to regulations
promulgated by regulatory authorities for the Shanghai Stock Exchange, the Stock Exchange of Hong
Kong Limited, and the Shenzhen Stock Exchange, and further regulations or restrictions, such as limitations
on redemptions or suspension of trading, may adversely impact the Stock Connect Program, if the authorities
believe it necessary to assure orderly markets or for other reasons. There is no guarantee that
all three exchanges will continue to support the Stock Connect Program in the future and no assurance that
further regulations will not adversely affect the availability of securities under Stock Connect or other operational
arrangements.
Investments in China A-shares may not be covered by the securities investor protection
programs of the exchanges and, without the protection of such programs, will be subject to the risk
of default by the broker. In the event that the depository of the Shanghai Stock Exchange and the Shenzhen Stock
Exchange defaulted,
14
a Fund may not be able to recover fully its losses from the depository or may be delayed
in receiving proceeds as part of any recovery process. In addition, because all trades on the Stock
Connect Program in respect of eligible China A-shares must be settled in Renminbi (RMB), the Chinese
currency, the Fund investing through the Stock Connect Program must have timely access to a reliable
supply of offshore RMB, which cannot be guaranteed. The existence of a liquid trading market for China A-shares
may depend on whether there is supply of, and demand for, such China A-shares. Market volatility
and settlement difficulties in the China A-shares markets may also result in significant fluctuations in the prices
of the securities traded on such markets.
China A-shares purchased through the Stock Connect Program are held in nominee name
and not the Fund’s name as the beneficial owner. It is possible, therefore, that a Fund’s ability to exercise its rights as a shareholder and to pursue claims against the issuer of China A-shares may be limited
because the nominee structure has not been tested in Chinese courts, as Chinese courts generally have
limited experience in applying the concept of beneficial ownership and the law in that area continues to
evolve. In addition, a Fund may not be able to participate in corporate actions affecting China A-shares held
through the Stock Connect Program due to time constraints or for other operational reasons.
Trades on the Stock Connect Program are subject to certain requirements prior to trading.
If these requirements are not completed prior to the market opening, a Fund cannot sell the
shares on that trading day. In addition, these requirements may limit the number of brokers that a Fund may
use to execute trades. Additionally, there are foreign ownership limitations that may result in limitations
on investment or the return of profits if a fund purchases and sells shares of an issuer in which it owns above a
certain threshold determined by China's securities rules. As a result, a Fund may not be able to execute trading
freely in accordance with its investment strategy and the profits that the Fund derives from such investments
may be limited.
Risks of Investments in the China Interbank Bond Market through the Bond Connect Program. The Fund may invest in China onshore bonds traded on the China Interbank Bond Market (CIBM)
through the China – Hong Kong Bond Connect Program (Bond Connect). In China, the Hong Kong Monetary Authority Central Moneymarkets Unit holds Bond Connect securities on behalf of ultimate investors
(such as the Fund) in accounts maintained with a China-based custodian (either the China Central Depository
& Clearing Co. or the Shanghai Clearing House). This recordkeeping system subjects a Fund to various
risks, including the risks of settlement delays and counterparty default of the China custodian and Hong
Kong custody agent. In addition, the Fund may have a limited ability to enforce rights as a bondholder because
enforcing the ownership rights of a beneficial holder of Bond Connect securities is untested and
courts in China have limited experience in applying the concept of beneficial ownership.
Bond Connect uses the trading infrastructure of both Hong Kong and China and is not
available on trading holidays in Hong Kong. As a result, prices of securities purchased through
Bond Connect may fluctuate at times when the Fund is unable to add to or exit its position. Securities
offered through Bond Connect may lose their eligibility for trading through Bond Connect at any time. If
Bond Connect securities lose their eligibility for trading through Bond Connect, they may be sold but can
no longer be purchased through Bond Connect.
Because Bond Connect trades are settled in RMB, the Fund investing through Bond Connect
must have timely access to a reliable supply of offshore RMB, which cannot be guaranteed.
Market volatility and potential lack of liquidity due to low trading volume of certain
bonds on the CIBM may result in prices of such bonds fluctuating significantly, exposing a Fund to liquidity
and volatility risks. The bid-ask spreads of the prices of such securities may be large, and a Fund may therefore incur
significant costs and may suffer losses when selling such investments. Bonds traded on the CIBM may
be difficult or impossible to sell, which may impact a Fund’s ability to acquire or dispose of such securities at their expected prices.
Bond Connect is relatively new and its effects on the Chinese interbank bond market
are uncertain. Trading through Bond Connect is performed through newly developed trading platforms
and operational systems, and in the event of systems malfunctions or extreme market conditions, trading
via Bond Connect
15
could be disrupted. There can be no assurance as to Bond Connect’s continued existence or whether future developments regarding Bond Connect (including further interpretation and guidance
provided by regulators in Hong Kong and China) may restrict or adversely affect the Fund’s investments or returns. Finally, uncertainties in China tax rules governing taxation of income and gains from investments
via Bond Connect could result in unexpected tax liabilities for a Fund.
Foreign Government Obligations. The Fund may invest in debt securities of foreign governments. Debt securities issued by foreign governments are often, but not always, supported by the
full faith and credit of the foreign governments, or their subdivisions, agencies or instrumentalities, that issue
them. These securities involve the risks discussed above under “Foreign Securities”. Additionally, the issuer of the debt or the governmental authorities that control repayment of the debt may be unwilling or unable
to pay interest or repay principal when due. Political or economic changes or the balance of trade may affect a country’s willingness or ability to service its debt obligations. Periods of economic uncertainty
may result in the volatility of market prices of sovereign debt obligations, especially debt obligations issued
by the governments of developing countries. Foreign government obligations of developing countries, and
some structures of emerging market debt securities, both of which are generally below investment grade,
are sometimes referred to as “Brady Bonds.” The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result
in the cancellation of third-party commitments to lend funds to the sovereign debtor, which may impair the debtor’s ability or willingness to service its debts.
Foreign Exchange Transactions. The Fund may invest in foreign currency-denominated securities and has the authority to purchase and sell put and call options on foreign currencies
(foreign currency options), foreign currency futures contracts and related options, and currency-related swaps,
and may engage in foreign currency transactions either on a spot (i.e., for prompt delivery and settlement)
basis at the rate prevailing in the currency exchange market at the time or through forward foreign
currency contracts (see “Forward Foreign Currency Contracts”). The use of these instruments may result in a loss to the Fund if the counterparty to the transaction (particularly with respect to OTC derivatives, as
discussed further below) does not perform as promised, including because of such counterparty’s bankruptcy or insolvency.
The Fund will incur costs in converting assets from one currency to another. Foreign
exchange dealers may charge a fee for conversion. In addition, dealers may realize a profit based on
the difference between the prices at which they buy and sell various currencies in the spot and forward markets.
The Fund will generally engage in these foreign exchange transactions in order to
complete a purchase or sale of foreign currency denominated securities. The Fund may also use foreign currency
options, forward foreign currency contracts, foreign currency futures contracts and currency-related
swap contracts to increase or reduce exposure to a foreign currency, to shift exposure from one foreign currency
to another in a cross currency hedge or to enhance returns. These transactions are intended to minimize
the risk of loss due to a decline in the value of the hedged currencies; however, at the same time, they tend
to limit any potential gain which might result should the value of such currencies increase.
The Fund may purchase and sell foreign currency futures contracts and purchase and
write foreign currency options to increase or decrease its exposure to different foreign currencies.
The Fund may also purchase and write foreign currency options in connection with foreign currency futures
contracts or forward foreign currency contracts. Foreign currency futures contracts are traded on exchanges
and have standard contract sizes and delivery dates. Most foreign currency futures contracts call for
payment or delivery in U.S. dollars. The uses and risks of foreign currency futures contracts are similar to those
of futures contracts relating to securities or indices (see “Futures Contracts”). Foreign currency futures contracts’ values can be expected to correlate with exchange rates but may not reflect other factors that affect the value of the Fund’s investments.
Whether or not any hedging strategy will be successful is highly uncertain, and use
of hedging strategies may leave the Fund in a less advantageous position than if a hedge had not been established.
Moreover, it is impossible to forecast with precision the market value of portfolio securities at
the expiration of a forward foreign currency contract. Accordingly, the Fund may be required to buy or sell additional
currency on the spot
16
market (and bear the expense of such transaction) if Invesco’s or the Sub-Advisers’ predictions regarding the movement of foreign currency or securities markets prove inaccurate.
The Fund may hold a portion of its assets in bank deposits denominated in foreign
currencies, so as to facilitate investment in foreign securities as well as protect against currency fluctuations
and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To
the extent these monies are converted back into U.S. dollars, the value of the assets so maintained will be
affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations.
Foreign exchange transactions may involve some of the risks of investments in foreign securities.
For a discussion of tax considerations relating to foreign currency transactions, see "Dividends, Distributions and Tax Matters—Tax Matters—Tax Treatment of Portfolio Transactions—Foreign currency transactions."
Under definitions adopted by the Commodity Futures Trading Commission (CFTC) and the
U.S. Securities and Exchange Commission (SEC), non-deliverable foreign exchange forwards
and OTC foreign exchange options are considered “swaps.” These instruments are therefore included in the definition of “commodity interests” for purposes of determining whether fund service providers qualify for certain exemptions and exclusions from regulation by the CFTC. Although non-deliverable forward
foreign currency contracts have historically been traded in the OTC market, as swaps they may in the
future be regulated to be centrally cleared and traded on public execution facilities. For more information, see “Forward Foreign Currency Contracts” and “Swaps.”
Floating Rate Corporate Loans and Corporate Debt Securities of Non-U.S. Borrowers. Floating rate loans and debt securities made to and issued by non-U.S. borrowers in which the Fund
invests will be U.S. dollar-denominated or otherwise provide for payment in U.S. dollars, and the borrower
will meet the credit quality standards established by Invesco and the Sub-Advisers for U.S. borrowers.
The Fund similarly may invest in floating rate loans and floating rate debt securities made to and issued
by U.S. borrowers with significant non-U.S. dollar-denominated revenues; provided that the loans are U.S.
dollar-denominated or otherwise provide for payment to the Fund in U.S. dollars.In cases where the floating
rate loans or floating rate debt securities are not denominated in U.S. dollars, provisions will be made
for payments to the lenders, including the Fund, in U.S. dollars pursuant to foreign currency swaps.
Foreign Bank Obligations. Foreign bank obligations include certificates of deposit, banker’s acceptances and fixed time deposits and other obligations (a) denominated in U.S.
dollars and issued by a foreign branch of a domestic bank (Eurodollar Obligations), (b) denominated in U.S.
dollars and issued by a domestic branch of a foreign bank (Yankee Dollar Obligations), or (c) issued by foreign
branches of foreign banks. Foreign banks are not generally subject to examination by any U.S. government
agency or instrumentality.
Risks Related to Armed Conflict. As a result of increasingly interconnected global economies and financial markets, armed conflict between countries or in a geographic region, for
example the current conflicts between Russia and Ukraine in Europe and Hamas and Israel in the Middle
East, has the potential to adversely impact Fund investments. Such conflicts, and other corresponding events,
have had, and could continue to have, severe negative effects on regional and global economic and financial
markets, including increased volatility, reduced liquidity, and overall uncertainty. The negative impacts
may be particularly acute in certain sectors. The timing and duration of such conflicts, resulting sanctions,
related events and other implications cannot be predicted. The foregoing may result in a negative impact on
Fund performance and the value of an investment in the Fund, even beyond any direct investment exposure the
Fund may have to issuers located in or with significant exposure to an impacted country or geographic
region.
Risks Related to Russian Invasion of Ukraine. In late February 2022, Russian military forces invaded Ukraine, significantly amplifying already existing geopolitical tensions among
Russia, Ukraine, Europe, the North Atlantic Treaty Organization (NATO), and the West. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential for wider conflict may increase financial market volatility and could have severe adverse effects on regional and
global economic markets, including the markets for certain securities and commodities such as oil
and natural gas.
17
Following Russia’s actions, various countries, including the U.S., Canada, the United Kingdom, Germany, and France, among others, as well as the European Union, issued broad-ranging
economic sanctions against Russia. The sanctions freeze certain Russian assets and prohibit
trading by individuals and entities in certain Russian securities, engaging in certain private
transactions, and doing business with certain Russian corporate entities, large financial institutions, officials
and oligarchs. The sanctions include a commitment by certain countries and the European Union to remove
selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications,
commonly called “SWIFT,” the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions.
A number of large corporations have since withdrawn from Russia or suspended or curtailed their Russia-based
operations.
The imposition of these current sanctions (and the potential for further sanctions
in response to Russia’s continued military activity) and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, including, but not limited
to, the financials, energy, metals and mining, engineering, and defense and defense-related materials
sectors. Such actions also may result in the decline of the value and liquidity of Russian securities,
a weakening of the ruble, and could impair the ability of a Fund to buy, sell, receive, or deliver those
securities. Moreover, the measures could adversely affect global financial and energy markets and thereby
negatively affect the value of a Fund’s investments beyond any direct exposure to Russian issuers or those of adjoining geographic regions.
In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia also prevented the export of certain goods
and payments to foreign shareholders of Russian securities. Russia may take additional countermeasures
or retaliatory actions, which may further impair the value and liquidity of Russian securities and
Fund investments. Such actions could, for example, include restricting gas exports to other countries,
the seizure of U.S. and European residents’ assets, or undertaking or provoking other military conflict elsewhere in Europe, any of which could exacerbate negative consequences on global financial markets and
the economy. The actions discussed above could have a negative effect on the performance of Funds
that have exposure to Russia. While diplomatic efforts have been ongoing, the conflict between
Russia and Ukraine is unpredictable and has the potential to result in broader military actions.
The duration of the ongoing conflict and corresponding sanctions and related events cannot be predicted
and may result in a negative impact on Fund performance and the value of Fund investments, particularly
as it relates to Russian exposure.
Passive Foreign Investment Companies. Under U.S. tax laws, passive foreign investment companies (PFICs) are those foreign corporations which generate primarily “passive” income. Passive income is defined as any income that is considered foreign personal holding company income under the
Internal Revenue Code of 1986, as amended (Code). For federal tax purposes, a foreign corporation is deemed
to be a PFIC if 75% or more of its gross income during a taxable year is passive income or if 50% or more
of its assets during a taxable year are assets that produce, or are held to produce, passive income.
Foreign mutual funds are generally deemed to be PFICs, since nearly all of the income
of a mutual fund is passive income. Foreign mutual funds investments may be used to gain exposure to the
securities of companies in countries that limit or prohibit direct foreign investment; however,
investments in foreign mutual funds by a Fund are subject to limits under the Investment Company Act.
Other types of foreign corporations may also be considered PFICs if their percentage
of passive income or passive assets exceeds the limits described above. A determination as to whether
a foreign corporation is considered a PFIC is based on an interpretation of complex provisions of the tax law.
Accordingly, there can be no assurance that a conclusion regarding a corporation's status as a PFIC will
not be challenged by the Internal Revenue Service (IRS) and conclusions as to a corporation's PFIC status may
vary depending on who is doing the analysis. Unless a Fund makes an election with respect to its investment
in a PFIC, which election may not always be possible, income from the disposition of a PFIC investment
and from certain PFIC
18
distributions may be subject to adverse tax treatment. The application of the PFIC
rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, and may subject a Fund to tax on certain income from
PFIC shares. Federal tax laws impose severe tax penalties for failure to properly report investment income
from PFICs. Although every effort is made to ensure compliance with federal tax reporting requirements for these
investments, foreign corporations that are PFICs for federal tax purposes may not always be recognized
as such or may not provide the Fund with all information required to report, or make an election with
respect to, such investment.
A foreign issuer will not be treated as a PFIC with respect to a shareholder if such
issuer is a controlled foreign corporation for U.S. federal income tax purposes (CFC) and the shareholder
holds (directly, indirectly, or constructively) 10% or more of the voting interests in or total value of such issuer.
In such a case, the shareholder generally would be required to include in gross income each year, as ordinary
income, its share of certain amounts of a CFC’s income, whether or not the CFC distributes such shareholder’s share of such amounts to it. Under proposed regulations, such income will be considered “qualifying income” for purposes of a shareholder’s qualification as a regulated investment company only to the extent such income is timely distributed to that shareholder.
Additional risks of investing in other investment companies are described under “Other Investment Companies.”
Foreign Currency Warrants. Foreign currency warrants entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars)
which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified
foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants
generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants
have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers
in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers
of the securities, is inherent in the international fixed income marketplace.
Foreign currency warrants may attempt to reduce the foreign exchange risk assumed
by purchasers of a security by, for example, providing for a supplemental payment in the event that the
U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen or the euro.
The formula used to determine the amount payable upon exercise of a foreign currency warrant may make
the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction
(i.e., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which
the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which
they may be offered, and may be listed on exchanges.
Foreign currency warrants may be exercisable only in certain minimum amounts, and
an investor wishing to exercise warrants who possesses less than the minimum number required for exercise
may be required either to sell the warrants or to purchase additional warrants, thereby incurring
additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a
holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined,
during which time the exchange rate could change significantly, thereby affecting both the market and
cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated
if the warrants should be delisted from an exchange or if their trading should be suspended permanently,
which would result in the loss of any remaining “time value” of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case where the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants.
Foreign currency warrants generally are unsecured obligations of their issuers and
are not standardized foreign currency options issued by the Options Cleaning Corporation (OCC). Unlike
foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be amended
in the event of governmental or regulatory actions affecting exchange rates or in the event of the
imposition of other regulatory controls affecting the international currency markets. The initial public
offering price of foreign currency warrants is generally considerably in excess of the price that a commercial
user of foreign currencies
19
might pay in the interbank market for a comparable option involving significantly
larger amounts of foreign currencies. Foreign currency warrants are subject to complex political or economic
factors.
Performance Indexed Paper. Performance indexed paper is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield
to the investor on performance indexed paper is between the U.S. dollar and a designated currency as
of or about that time (generally, the index maturity two days prior to maturity). The yield to the investor
will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed
minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment
corresponding to the minimum and maximum values of the spot exchange rate two business days prior to
maturity.
Exchange-Traded Funds
Exchange-Traded Funds (ETFs). The Fund may purchase shares of ETFs. Most ETFs are registered under the 1940 Act as investment companies, although others may not be registered
as investment companies and are registered as commodity pools. Therefore, the Fund’s purchase of shares of an ETF may be subject to the restrictions on investments in other investment companies discussed under “Other Investment Companies.” ETFs have management fees, which increase their cost. The Fund may invest in ETFs advised by unaffiliated advisers as well as ETFs advised by Invesco Capital Management
LLC (Invesco Capital). Invesco, the Sub-Advisers and Invesco Capital are affiliates of each other
as they are all indirect wholly-owned subsidiaries of Invesco Ltd.
Generally, ETFs hold portfolios of securities, commodities and/or currencies that
are designed to replicate, as closely as possible before expenses, the performance of a specified
market index. The performance results of ETFs will not replicate exactly the performance of the pertinent
index due to transaction and other expenses, including fees to service providers, borne by ETFs.
Furthermore, there can be no assurance that the portfolio of securities, commodities and/or currencies purchased
by an ETF will replicate a particular index. Some ETFs are actively managed and instead of replicating
a particular index they seek to outperform it, or outperform a basket of securities or price of a commodity
or currency.
Only Authorized Participants (APs) may engage in creation or redemption transactions
directly with ETFs. ETF shares are sold to and redeemed by APs at net asset value only in large blocks
called creation units and redemption units, respectively. Such market makers have no obligation to submit creation
or redemption orders; consequently, there is no assurance that market makers will establish or maintain
an active trading market for ETF shares. In addition, to the extent that APs exit the business or are
unable to proceed with creation and/or redemption orders with respect to an ETF and no other AP is able to
step forward to create or redeem units of an ETF, an ETF’s shares may be more likely to trade at a premium or discount to net asset value and possibly face trading halts and/or delisting. ETF shares may be purchased
and sold by all other investors in secondary market trading on national securities exchanges, which allows
investors to purchase and sell ETF shares at their market price throughout the day.
Investments in ETFs generally present the same primary risks as an investment in a
conventional mutual fund that has the same investment objective, strategy and policies. Investments in
ETFs further involve the same risks associated with a direct investment in the types of securities, commodities
and/or currencies included in the indices the ETFs are designed to replicate. In addition, shares of
an ETF may trade at a market price that is higher or lower than their net asset value and an active trading
market in such shares may not develop or continue. Moreover, trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action to be appropriate, the shares are de-listed from the exchange, or
the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Exchange-Traded Notes
Exchange-Traded Notes (ETNs). ETNs are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market benchmark or strategy,
minus applicable fees. ETNs are traded on an exchange (e.g., the New York Stock Exchange) during normal trading
hours; however,
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investors can also hold the ETN until maturity. At maturity, the issuer pays to the
investor a cash amount equal to the principal amount, subject to the day’s market benchmark or strategy factor. ETNs do not make periodic coupon payments or provide principal protection. ETNs are subject to credit risk,
including the credit risk of the issuer, and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may
also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of
liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests
in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. A decision to sell
ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may
be listed on an exchange, the issuer may not be required to maintain the listing, and there can be no assurance
that a secondary market will exist for an ETN.
ETNs are also subject to tax risk. No assurance can be given that the Internal Revenue
Service (IRS) will accept, or a court will uphold, how ETNs are characterized or treated for tax purposes.
Further, the IRS and Congress are considering proposals that would change the timing and character of income
and gains from ETNs.
An ETN that is tied to a specific market benchmark or strategy may not be able to
replicate and maintain exactly the composition and relative weighting of securities, commodities or other
components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times,
be relatively illiquid, and thus they may be difficult to purchase or sell at a fair price. Leveraged ETNs
are subject to the same risk as other instruments that use leverage in any form.
The market value of ETNs may differ from their market benchmark or strategy. This
difference in price may be due to the fact that the supply and demand in the market for ETNs at any point
in time is not always identical to the supply and demand in the market for the securities, commodities or
other components underlying the market benchmark or strategy that the ETN seeks to track. As a result,
there may be times when an ETN trades at a premium or discount to its market benchmark or strategy.
Debt Investments
U.S. Government Obligations. U.S. government obligations are obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities, including bills, notes and bonds
issued by the U.S. Treasury, as well as “stripped” or “zero coupon” U.S. Treasury obligations.
U.S. government obligations may be, (i) supported by the full faith and credit of
the U.S. Treasury, (ii) supported by the right of the issuer to borrow from the U.S. Treasury, (iii) supported
by the discretionary authority of the U.S. government to purchase the agency’s obligations, or (iv) supported only by the credit of the instrumentality. There is a risk that the U.S. government may choose not to provide
financial support to U.S. government-sponsored agencies or instrumentalities if it is not legally obligated
to do so. In that case, if the issuer were to default, the Fund holding securities of such issuer might not be
able to recover its investment from the U.S. government. For example, while the U.S. government has provided
financial support to Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation
(FHLMC), no assurance can be given that the U.S. government will always do so, since the U.S.
government is not so obligated by law. There also is no guarantee that the government would support Federal
Home Loan Banks. Accordingly, securities of FNMA, FHLMC and Federal Home Loan Banks, and other agencies,
may involve a risk of non-payment of principal and interest. Any downgrade of the credit rating
of the securities issued by the U.S. government may result in a downgrade of securities issued by its agencies or
instrumentalities, including government-sponsored entities. Additionally, from time to time uncertainty regarding
the status of negotiations in the U.S. government to increase the statutory debt limit, commonly called the “debt ceiling,” could increase the risk that the U.S. government may default on payments on certain U.S. government
securities, cause the credit rating of the U.S. government to be downgraded, increase volatility in the
stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or
increase the costs of various kinds of debt. If a U.S. government-sponsored entity is negatively impacted by legislative
or regulatory action,
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is unable to meet its obligations, or its creditworthiness declines, the performance
of a Fund that holds securities of that entity will be adversely impacted.
Inflation-Indexed Bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common.
The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value
of the bond. Most other issuers pay out the Consumer Price Index (CPI) accruals as part of a semiannual coupon.
Inflation-indexed securities issued by the U.S. Treasury have maturities of five,
ten or thirty years, although it is possible that securities with other maturities will be issued in the
future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the
inflation-adjusted principal amount. For example, if a fund purchased an inflation-indexed bond with a par value
of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and inflation over the first six
months was 1%, the mid-year par value of the bond would be $1,010 and the first semi-annual interest payment
would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole years’ inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second
semiannual interest payment would be $15.45 ($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the principal value of
inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated
with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal
upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed
bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and
will fluctuate. The Fund may also invest in other inflation related bonds which may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid
at maturity may be less than the original principal.
The value of inflation-indexed bonds is expected to change in response to changes
in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest
rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates,
real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal
interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease
in value of inflation-indexed bonds.
While these securities are expected to be protected from long-term inflationary trends,
short-term increases in inflation may lead to a decline in value. If interest rates rise due
to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities
may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price
Index for Urban Consumers (CPI-U), which is calculated monthly by the U.S. Bureau of Labor Statistics.
The CPI-U is a measurement of changes in the cost of living, made up of components such as housing,
food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted
to reflect a comparable inflation index, calculated by that government. There can be no assurance
that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the
prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country
will be correlated to the rate of inflation in the United States.
Any increase in the principal amount of an inflation-indexed bond will be considered
taxable ordinary income, even though investors do not receive their principal until maturity.
Temporary Investments. The Fund may invest a portion of its assets in affiliated money market funds or in other types of money market instruments in which those funds would invest or other
short-term U.S. government securities for cash management purposes. The Fund may invest up to 100%
of its assets in investments that may be inconsistent with the Fund's principal investment strategies
for temporary defensive purposes in anticipation of or in response to adverse market, economic, political
or other conditions, or
22
atypical circumstances such as unusually large cash inflows or redemptions. As a result,
the Fund may not achieve its investment objective.
Changing Interest Rates. In a low or negative interest rate environment, debt securities may trade at, or
be issued with, negative yields, which means the purchaser of the security may receive
at maturity less than the total amount invested. In addition, in a negative interest rate environment, if
a bank charges negative interest, instead of receiving interest on deposits, a depositor must pay the bank
fees to keep money with the bank. To the extent a Fund holds a negatively-yielding debt security or has a bank
deposit with a negative interest rate, the Fund would generate a negative return on that investment. Cash
positions may also subject a Fund to increased counterparty risk to the Fund's bank. Debt market conditions are
highly unpredictable and some parts of the market are subject to dislocations. In the past, the U.S. government
and certain foreign central banks have taken steps to stabilize markets by, among other things, reducing
interest rates. To the extent such actions are pursued, they present heightened risks to debt securities,
and such risks could be even further heightened if these actions are unexpectedly or suddenly reversed or
are ineffective in achieving their desired outcomes. In recent years, the U.S. government began implementing increases
to the federal funds interest rate and there may be further rate increases. As interest rates rise,
there is risk that rates across the financial system also may rise. To the extent rates increase substantially
and/or rapidly, the Funds may be subject to significant losses.
In a low or negative interest rate environment, some investors may seek to reallocate
assets to other income-producing assets. This may cause the price of such higher yielding instruments
to rise, could further reduce the value of instruments with a negative yield, and may limit a Fund's ability
to locate fixed income instruments containing the desired risk/return profile. Changing interest rates, including,
rates that fall below zero, could have unpredictable effects on the markets and may expose fixed income
markets to heightened volatility, increased redemptions, and potential illiquidity.
With respect to a money market fund, which seeks to maintain a stable $1.00 price
per share, a low or negative interest rate environment could impact the money market fund’s ability to maintain a stable $1.00 share price. During a negative interest rate environment causing a money market fund to have a negative gross yield, the money market fund may reduce the number of shares outstanding on a pro rata basis
through reverse distribution mechanisms or other mechanisms to seek to maintain a stable $1.00 price per share, subject to approval of the board of trustees of the money market fund and to the extent permissible by applicable law and its organizational documents. A money market fund that implements share cancellation would continue to maintain a stable $1.00 share price by use of the amortized cost
method of valuation and/or penny rounding method but the value of an investor’s investment would decline if the fund reduces the number of shares held by the investor. Alternatively, the money market fund may discontinue using the amortized cost method of valuation to maintain a stable $1.00 price per share and
establish a fluctuating NAV per share rounded to four decimal places by using available market quotations or equivalents. A money market fund that floats its NAV would no longer maintain a stable $1.00 share price
and instead have a share price that fluctuates. An investor in a money market fund that floats its NAV would
lose money if the investor sells their shares when they are worth less than what the investor originally paid
for them.
Mortgage-Backed and Asset-Backed Securities. Mortgage-backed and asset-backed securities include commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities
(RMBS). Mortgage-backed securities are mortgage-related securities issued or guaranteed by
the U.S. government, its agencies and instrumentalities, or issued by non-government entities, such as commercial
banks and other private lenders. Mortgage-related securities represent ownership in pools of mortgage
loans assembled for sale to investors by various government agencies such as the Government National Mortgage
Association (GNMA) and government-related organizations such as the FNMA and the FHLMC, as well
as by non-government issuers such as commercial banks, savings and loan institutions, mortgage bankers
and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the security, which may fluctuate,
is not so secured. These securities differ from conventional bonds in that the principal is paid back to the
investor as payments are made on the underlying mortgages in the pool. Accordingly, the Fund receives monthly
scheduled payments of principal and interest along with any unscheduled principal prepayments on the
underlying mortgages.
23
Because these scheduled and unscheduled principal payments must be reinvested at prevailing
interest rates, mortgage-backed securities do not provide an effective means of locking in
long-term interest rates for the investor. Although the value of a mortgage-backed security may decline when interest
rates rise, the converse is not necessarily true, since in periods of declining interest rates the
mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average
life of the security and shortening the period of time over which income at the higher rate is received. When
interest rates are rising, the rate of prepayment tends to decrease, thereby lengthening the period of time over
which income at the lower rate is received. For these and other reasons, a mortgage-backed security's
average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore,
it is not possible to predict accurately the security's return.
There are a number of important differences among the agencies and instrumentalities of
the U.S. government that issue mortgage-related securities and among the securities they issue.
Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known
as Ginnie Maes) which are guaranteed as to the timely payment of principal and interest. That guarantee
is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly-owned by the U.S.
government within the Department of Housing and Urban Development. Mortgage-related securities issued by
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as Fannie Maes) and are
guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with
the U.S. Treasury. FNMA is a government-sponsored entity (GSE) wholly-owned by public stockholders. Mortgage-related
securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as Freddie
Macs) and are guaranteed as to payment of principal and interest by FHLMC itself and backed by a
line of credit with the U.S. Treasury. FHLMC is a GSE wholly-owned by public stockholders.
Another type of mortgage-related security issued by GSEs, such as FNMA and FHLMC,
is credit risk transfer securities. GSE credit risk transfer securities are unguaranteed and unsecured
fixed or floating rate general obligations issued by GSEs, which are typically issued at par and have stated
final maturities. In addition, GSE credit risk transfer securities are structured so that: (i) interest
is paid directly by the issuing GSE; and (ii) principal is paid by the issuing GSE in accordance with the principal
payments and default performance of a pool of residential mortgage loans acquired by the GSE. The issuing
GSE selects the pool of mortgage loans based on that GSE’s eligibility criteria, and the performance of the credit risk transfer securities will be directly affected by the selection of such underlying mortgage
loans.
GSE credit risk transfer securities are not directly linked to or backed by the underlying
mortgage loans. Thus, although the payment of principal and interest on such securities is tied to
the performance of the pool of underlying mortgage loans, in no circumstances will the actual cash flow from the
underlying mortgage loans be paid or otherwise made available to the holders of the securities and the
holders of the securities will have no interest in the underlying mortgage loans. As a result, in the event that
a GSE fails to pay principal or interest on its credit risk transfer securities or goes through a bankruptcy, insolvency
or similar proceeding, holders of such credit risk transfer securities will have no direct recourse to the
underlying mortgage loans. Such holders will receive recovery on par with other unsecured note holders (agency
debentures) in such a scenario.
GSE credit risk transfer securities are issued in multiple tranches, which are allocated
certain principal repayments and credit losses corresponding to the seniority of the particular tranche.
Each tranche will have credit exposure to the underlying mortgage loans and the yield to maturity will be
directly related to the amount and timing of certain defined credit events on the underlying mortgage loans,
any prepayments by borrowers and any removals of a mortgage loan from the pool. Because credit risk exposure
is allocated in accordance with the seniority of the particular tranche, principal losses will be
first allocated to the most junior or subordinate tranches, thus making the most subordinate tranches subject to increased
sensitivity to dramatic housing downturns. In addition, many credit risk transfer securities have
collateral performance triggers (such as those based on credit enhancement, delinquencies or defaults) that
could shut off principal payments to subordinate tranches.
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The risks associated with an investment in GSE credit risk transfer securities will
be different than the risks associated with an investment in mortgage-backed securities issued by GSEs,
because some or all of the mortgage default or credit risk associated with the underlying mortgage loans
in credit risk transfer securities is transferred to investors, such as the Fund. As a result, investors in
GSE credit risk transfer securities could lose some or all of their investment in these securities if the underlying
mortgage loans default.
The Fund may also invest in credit risk transfer securities issued by private entities,
such as banks or other financial institutions. Credit risk transfer securities issued by private entities
are structured similarly to those issued by GSEs, and are generally subject to the same types of risks, including
credit, prepayment, extension, interest rate and market risks.
On September 7, 2008, FNMA and FHLMC were placed under the conservatorship of the
Federal Housing Finance Agency (FHFA) to provide stability in the financial markets, mortgage
availability and taxpayer protection by preserving FNMA and FHLMC’s assets and property and putting FNMA and FHLMC in a sound and solvent position.
Since 2009, both FNMA and FHLMC have received significant capital support through
U.S. Treasury preferred stock purchases and Federal Reserve purchases of the entities’ mortgage-backed securities.
In February 2011, the Obama Administration produced a report to Congress outlining
proposals to wind down FNMA and FHLMC and reduce the government’s role in the mortgage market. Discussions among policymakers continue as to whether FNMA and FHLMC should be nationalized, privatized, restructured, or
eliminated altogether. Such discussions create uncertainty as to FNMA’s future including how long FNMA will continue to exist in its current form, the extent of its role in the market, how long
it will be in conservatorship, what form it will have and what ownership interest, if any, current common and preferred
stockholders will hold after the conservatorship is terminated, and whether FNMA will continue to exist
following conservatorship. FHLMC faces similar uncertainty about its future. If FNMA and FHLMC are taken out of conservatorship, it is unclear how the capital structure of FNMA and FHLMC would be
constructed and what effects, if any, there may be on FNMA’s and FHLMC’s creditworthiness and guarantees of certain mortgage-backed securities. It is also unclear whether the U.S. Treasury would continue to enforce
its rights or perform its obligations related to senior preferred stock. Should FNMA’s and FHLMC’s conservatorship end, there could be an adverse impact on the value of their securities, which could cause Fund
losses.
Asset-backed securities are structured like mortgage-backed securities, but instead
of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor
vehicle installment sales contracts or installment loan contracts, leases of various types of real and personal
property, and receivables from credit card agreements and from sales of personal property. Regular payments
received on asset-backed securities include both interest and principal. Asset-backed securities typically
have no U.S. Government backing. Additionally, the ability of an issuer of asset-backed securities
to enforce its security interest in the underlying assets may be limited.
If the Fund purchases a mortgage-backed or other asset-backed security at a premium,
the premium may be lost if there is a decline in the market value of the security whether resulting
from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest rates. Like mortgage-backed securities, the varied effects of fluctuating interest rates on asset-backed security values make it impossible to accurately predict the security’s return. In addition, while the trading market for short-term mortgages and asset-backed securities is ordinarily quite liquid, in times of financial stress the trading market
for these securities may become restricted.
CMBS and RMBS generally offer a higher rate of interest than government and government-related
mortgage-backed securities because there are no direct or indirect government or government
agency guarantees of payment. The risk of loss due to default on CMBS and RMBS is historically
higher because neither the U.S. government nor an agency or instrumentality have guaranteed them.
CMBS and RMBS whose underlying assets are neither U.S. government securities nor U.S. government
insured mortgages, to
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the extent that real properties securing such assets may be located in the same geographical
region, may also be subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect such region and, ultimately, the
ability of property owners to make payments of principal and interest on the underlying mortgages. Non-government
mortgage-backed securities are generally subject to greater price volatility than those issued, guaranteed
or sponsored by government entities because of the greater risk of default in adverse market conditions.
Where a guarantee is provided by a private guarantor, the Fund is subject to the credit risk of such guarantor,
especially when the guarantor doubles as the originator.
Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. A CMO is a type of mortgage-backed security that
creates separate classes with varying maturities and interest rates, called tranches. Similar to a
bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole
mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed
by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different fixed or floating
interest rate and stated maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of
the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first returned to investors holding
the shortest maturity class. Investors holding the longer maturity classes receive principal only after
the first class has been retired. An investor is partially guarded against a sooner than desired return of principal
because of the sequential payments.
In a typical CMO transaction, a corporation (issuer) issues multiple series (i.e.,
Series A, B, C and Z) of CMO bonds (Bonds). Proceeds of the Bond offering are used to purchase mortgages or
mortgage pass-through certificates (Collateral). The Collateral is pledged to a third party trustee as
security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the
Bonds in the following order: Series A, B, C and Z. The Series A, B, and C Bonds all bear current interest.
Interest on a Series Z Bond is accrued and added to principal and a like amount is paid as principal on the
Series A, B, or C Bond is currently being paid off. Only after the Series A, B, and C Bonds are paid in full
does the Series Z Bond begin to receive payment. With some CMOs, the issuer serves as a conduit to allow loan originators
(primarily builders or savings and loan associations) to borrow against their loan portfolios.
CMOs that are issued or guaranteed by the U.S. government or by any of its agencies
or instrumentalities will be considered U.S. government securities by the Fund, while other CMOs, even
if collateralized by U.S. government securities, will have the same status as other privately issued securities
for purposes of applying the Fund's diversification tests.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different
maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased
by FHLMC. Payments of principal and interest on the FHLMC CMOs are made semiannually. The amount of principal
payable on each semiannual payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied
to the mortgage collateral pool. All sinking fund payments in the FHLMC CMOs are allocated to the
retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on
the mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund obligation for any payment date are paid to the holders of the FHLMC CMOs as additional sinking fund payments. Because of the “pass-through” nature of all principal payments received on the collateral pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the FHLMC CMOs is actually repaid is likely
to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection
of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient
to meet the FHLMC CMO’s minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
26
Classes of CMOs may also include interest only securities (IOs) and principal only
securities (POs). IOs and POs are stripped mortgage-backed securities representing interests in a pool of
mortgages the cash flow from which has been separated into interest and principal components. IOs receive
the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile
in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends
to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise
since this increases the rate at which the investment is returned and the yield to maturity on the PO.
When payments on mortgages underlying a PO are slow, the life of the PO is lengthened and the yield
to maturity is reduced.
CMOs are generally subject to the same risks as mortgage-backed securities. In addition,
CMOs may be subject to credit risk because the issuer or credit enhancer has defaulted on its
obligations and the Fund may not receive all or part of its principal. Obligations issued by U.S. government-related
entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith
and credit of the U.S. government. The performance of private label mortgage-backed securities, issued by
private institutions, is based on the financial health of those institutions. Although GNMA guarantees timely
payment of GNMA certificates even if homeowners delay or default, tracking the “pass-through” payments may, at times, be difficult.
Collateralized Debt Obligations (CDOs). A CDO is a security backed by a pool of bonds, loans and other debt obligations. CDOs are not limited to investing in one type of debt and
accordingly, a CDO may own corporate bonds, commercial loans, asset-backed securities, residential mortgage-backed
securities, commercial mortgage-backed securities, and emerging market debt. The CDO’s securities are typically divided into several classes, or bond tranches, that have differing levels of investment
grade or credit tolerances. Most CDO issues are structured in a way that enables the senior bond classes
and mezzanine classes to receive investment-grade credit ratings. Credit risk is shifted to the
most junior class of securities. If any defaults occur in the assets backing a CDO, the senior bond classes are first
in line to receive principal and interest payments, followed by the mezzanine classes and finally by the lowest
rated (or non-rated) class, which is known as the equity tranche. Similar in structure to a collateralized mortgage
obligation (described above) CDOs are unique in that they represent different types of debt and credit risk.
Collateralized Loan Obligations (CLOs). CLOs are debt instruments backed solely by a pool of other debt securities. The risks of an investment in a CLO depend largely on the type of
the collateral securities and the class of the CLO in which a Fund invests. Some CLOs have credit ratings, but are
typically issued in various classes with various priorities. Normally, CLOs are privately offered and
sold (that is, they are not registered under the securities laws) and may be characterized by a Fund as illiquid
investments; however, an active dealer market may exist for CLOs that qualify for Rule 144A transactions. In
addition to the normal interest rate, default and other risks of fixed income securities, CLOs carry additional
risks, including the possibility that distributions from collateral securities will not be adequate to
make interest or other payments, the quality of the collateral may decline in value or default a Fund may invest in
CLOs that are subordinate to other classes, values may be volatile, and disputes with the issuer may produce unexpected
investment results.
Credit Linked Notes (CLNs). The Fund may invest in CLNs. A CLN is a security structured and issued by an issuer, which may be a bank, broker or special purpose vehicle. If a CLN is
issued by a special purpose vehicle, the special purpose vehicle will typically be collateralized by AAA-rated
securities, but some CLNs are not collateralized. The performance and payment of principal and interest is tied
to that of a reference obligation which may be a particular security, basket of securities, credit default
swap, basket of credit default swaps, or index. The reference obligation may be denominated in foreign currencies.
Risks of CLNs include those risks associated with the underlying reference obligation including, but not
limited to, market risk, interest rate risk, credit risk, default risk and foreign currency risk. In the case
of a CLN created with credit default swaps, the structure will be “funded” such that the par amount of the security will represent the maximum loss that could be incurred on the investment and no leverage is introduced.
An investor in a CLN also bears counterparty risk or the risk that the issuer of the CLN will default or
become bankrupt and not make timely payments of principal and interest on the structured security. Should
the issuer default or declare bankruptcy, the CLN holder may not receive any compensation. In return for these risks,
the CLN holder
27
receives a higher yield. As with most derivative instruments, valuation of a CLN may
be difficult due to the complexity of the security.
Bank Instruments. Bank instruments are unsecured interest bearing bank deposits. Bank instruments include, but are not limited to, certificates of deposit, time deposits, and banker’s acceptances from U.S. or foreign banks, as well as Eurodollar certificates of deposit (Eurodollar CDs) and
Eurodollar time deposits of foreign branches of domestic banks. Some certificates of deposit are negotiable interest-bearing
instruments with a specific maturity issued by banks and savings and loan institutions in exchange
for the deposit of funds, and can typically be traded in the secondary market prior to maturity. Other
certificates of deposit, like time deposits, are non-negotiable receipts issued by a bank in exchange for the deposit
of funds which earns a specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. A banker’s acceptance is a bill of exchange or time draft drawn on and accepted by a commercial bank.
An investment in Eurodollar CDs or Eurodollar time deposits may involve some of the
same risks that are described for Foreign Securities.
Commercial Instruments. Commercial instruments include commercial paper, master notes and other short-term corporate instruments, that are denominated in U.S. dollars or foreign
currencies.
Commercial instruments are a type of instrument issued by large banks and corporations
to raise money to meet their short-term debt obligations, and are only backed by the issuing bank or corporation’s promise to pay the face amount on the maturity date specified on the note. Commercial paper consists
of short-term promissory notes issued by corporations. Commercial paper may be traded in the secondary
market after its issuance. Master notes are demand notes that permit the investment of fluctuating
amounts of money at varying rates of interest pursuant to arrangements with issuers who meet certain credit
quality criteria. The interest rate on a master note may fluctuate based on changes in specified interest
rates or may be reset periodically according to a prescribed formula or may be a set rate. Although there
is no secondary market in master notes, if such notes have a demand feature, the payee may demand payment of
the principal amount of the note upon relatively short notice. Master notes are generally illiquid and
therefore typically subject to the Fund's percentage limitations for investments in illiquid investments. Commercial
instruments may not be registered with the SEC.
Synthetic Municipal Instruments. Synthetic municipal instruments are instruments, the value of and return on which are derived from underlying securities. Synthetic municipal instruments
in which the Fund may invest include tender option bonds, and fixed or variable rate trust certificates.
These types of instruments involve the deposit into a trust or custodial account of one or more long-term
tax-exempt bonds or notes (Underlying Bonds), and the sale of certificates evidencing interests in the
trust or custodial account to investors such as the Fund. The trustee or custodian receives the long-term fixed
rate interest payments on the Underlying Bonds, and pays certificate holders fixed rates or short-term floating
or variable interest rates which are reset periodically. A “tender option bond” provides a certificate holder with the conditional right to sell its certificate to the sponsor or some designated third party at specified intervals
and receive the par value of the certificate plus accrued interest (a demand feature). A "fixed rate trust certificate"
evidences an interest in a trust entitling a certificate holder to fixed future interest and/or principal
payments on the Underlying Bonds. A “variable rate trust certificate” evidences an interest in a trust entitling the certificate holder to receive variable rate interest based on prevailing short-term interest rates and also typically
provides the certificate holder with the conditional demand feature (the right to tender its certificate at
par value plus accrued interest under certain conditions).
All synthetic municipal instruments must meet the minimum quality standards for the
Fund's investments and must present minimal credit risks. In selecting synthetic municipal instruments
for the Fund, Invesco considers the creditworthiness of the issuer of the Underlying Bond, the sponsor and
the party providing certificate holders with a conditional right to sell their certificates at stated
times and prices (a demand feature).
28
Typically, a certificate holder cannot exercise the demand feature until the occurrence
of certain conditions, such as where the issuer of the Underlying Bond defaults on interest payments.
Moreover, because synthetic municipal instruments involve a trust or custodial account and a
third party conditional demand feature, they involve complexities and potential risks that may not be present
where a municipal security is owned directly.
The tax-exempt character of the interest paid to certificate holders is based on the
assumption that the holders have an ownership interest in the Underlying Bonds; however, the IRS has not
issued a ruling addressing this issue. In the event the IRS issues an adverse ruling or successfully
litigates this issue, it is possible that the interest paid to the Fund on certain synthetic municipal instruments
would be deemed to be taxable. The Fund relies on opinions of special tax counsel on this ownership question
and opinions of bond counsel regarding the tax-exempt character of interest paid on the Underlying Bonds.
Municipal Securities. Municipal Securities are typically debt obligations of states, territories or possessions of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, the interest on which, in the opinion of bond counsel or other
counsel to the issuers of such securities, is, at the time of issuance, exempt from federal income tax. The issuers
of municipal securities obtain funds for various public purposes, including the construction of a wide range
of public facilities such as airports, highways, bridges, schools, hospitals, housing, mass transportation, streets
and water and sewer works. Other public purposes for which municipal securities may be issued include
refunding outstanding obligations, obtaining funds for general operating expenses and obtaining funds to
lend to other public institutions and facilities.
Certain types of municipal securities are issued to obtain funding for privately operated
facilities. The credit and quality of private activity debt securities are dependent on the private
facility or user, who is responsible for the interest payment and principal repayment.
The two major classifications of Municipal Securities are bonds and notes. Municipal
bonds are municipal debt obligations in which the issuer is obligated to repay the original (or “principal”) payment amount on a certain maturity date along with interest. A municipal bond’s maturity date (the date when the issuer of the bond repays the principal) may be years in the future. Short-term bonds mature in
one to three years, while long-term bonds usually do not mature for more than a decade. Notes are short-term
instruments which usually mature in less than two years. Most notes are general obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or receipt
of other revenues. Municipal notes also include tax, revenue notes and revenue and bond anticipation notes (discussed
more fully below) of short maturity, generally less than three years, which are issued to obtain temporary
funds for various public purposes.
Municipal debt securities may also be classified as general obligation or revenue
obligations (or "special delegation securities"). General obligation securities are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and interest.
Revenue debt obligations, such as revenue bonds and revenue notes, are usually payable
only from the revenues derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise tax or other specific revenue source but not from the general taxing
power. The principal and interest payments for industrial development bonds or pollution control bonds are
often the sole responsibility of the industrial user and therefore may not be backed by the taxing power of the
issuing municipality. The interest paid on such bonds may be exempt from federal income tax, although current
federal tax laws place substantial limitations on the purposes and size of such issues. Such obligations
are considered to be Municipal Securities provided that the interest paid thereon, in the opinion of bond
counsel, qualifies as exempt from federal income tax. However, interest on municipal securities may give
rise to a federal alternative minimum tax (AMT) liability and may have other collateral federal income tax consequences. There is a risk that some or all of the interest received by the Fund from tax-exempt municipal
securities might become taxable as a result of tax law changes or determinations of the IRS.
29
Another type of revenue obligations is pre-refunded bonds, which are typically issued
to refinance debt. In other words, pre-refunded bonds result from the advance refunding of bonds that are
not currently redeemable. The proceeds from the issue of the lower yield and/or longer maturing
pre-refunding bond will usually be used to purchase U.S. government obligations, such as U.S. Treasury securities,
which are held in an escrow account and used to pay interest and principal payments until the scheduled
call date of the original bond issue occurs. Like other fixed income securities, pre-refunded bonds
are subject to interest rate, market, credit, and reinvestment risks. However, because pre-refunded bonds are generally
collateralized with U.S. government obligations, such pre-refunded bonds have essentially the same risks
of default as a AAA-rated security. The Fund will treat such pre-refunded securities as investment-grade securities,
notwithstanding the fact that the issuer of such securities may have a lower rating
(such as a below-investment-grade rating) from one or more rating agencies.
Within these principal classifications of municipal securities, there are a variety
of types of municipal securities, including but not limited to, fixed and variable rate securities, variable
rate demand notes, municipal leases, custodial receipts, participation certificates, inverse floating
rate securities, and derivative municipal securities.
After purchase by the Fund, an issue of Municipal Securities may cease to be rated
by Moody's Investors Service, Inc. (Moody's) or S&P Global Ratings (S&P), or another nationally recognized statistical rating organization (NRSRO), or the rating of such a security may be reduced below the minimum
credit quality rating required for purchase by the Fund. Neither event would require the Fund to
dispose of the security. To the extent that the ratings applied by Moody’s, S&P or another NRSRO to Municipal Securities may change as a result of changes in these rating systems, the Fund will attempt to use comparable
credit quality ratings as standards for its investments in Municipal Securities.
The yields on Municipal Securities are dependent on a variety of factors, including
general economic and monetary conditions, money market factors, conditions of the Municipal Securities
market, size of a particular offering, and maturity and rating of the obligation. Because many Municipal Securities
are issued to finance similar projects, especially those related to education, health care, transportation
and various utilities, conditions in those sectors and the financial condition of an individual municipal
issuer can affect the overall municipal market. The market values of the Municipal Securities held by the Fund will
be affected by changes in the yields available on similar securities. If yields increase following the purchase
of a Municipal Security, the market value of such Municipal Security will generally decrease. Conversely, if
yields decrease, the market value of a Municipal Security will generally increase. The ratings of S&P and Moody’s represent their opinions of the quality of the municipal securities they undertake to rate. It should
be emphasized, however, that ratings are general and are not absolute standards of quality. Consequently,
municipal securities with the same maturity, coupon and rating may have different yields while municipal securities
of the same maturity and coupon with different ratings may have the same yield.
Certain of the municipal securities in which the Fund may invest represent relatively
recent innovations in the municipal securities markets and the markets for such securities may be less developed
than the market for conventional fixed rate municipal securities.
Under normal market conditions, longer-term municipal securities generally provide
a higher yield than shorter-term municipal securities. The Fund has no limitation as to the maturity of
municipal securities in which it may invest. The Adviser may adjust the average maturity of the Fund’s portfolio from time to time depending on its assessment of the relative yields available on securities of different
maturities and its expectations of future changes in interest rates.
The net asset value of the Fund will change with changes in the value of its portfolio
securities. With fixed income municipal securities, the net asset value of a Fund can be expected to change
as general levels of interest rates fluctuate. When interest rates decline, the value of a portfolio invested
in fixed income securities generally can be expected to rise. Conversely, when interest rates rise, the value
of a portfolio invested in fixed income securities generally can be expected to decline. The prices of longer
term municipal securities generally are more volatile with respect to changes in interest rates than the prices
of shorter term municipal securities. Volatility may be greater during periods of general economic uncertainty.
30
Municipal Securities, like other debt obligations, are subject to the credit risk
of nonpayment. The ability of issuers of municipal securities to make timely payments of interest and principal
may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated
and reallocated among federal, state and local governmental units. Such nonpayment would result in
a reduction of income to the Fund, and could result in a reduction in the value of the municipal securities
experiencing nonpayment and a potential decrease in the net asset value of the Fund. In addition, the Fund
may incur expenses to work out or restructure a distressed or defaulted security.
The Fund may invest in Municipal Securities with credit enhancements such as letters
of credit and municipal bond insurance. The Fund may invest in Municipal Securities that are insured
by financial insurance companies. Since a limited number of entities provide such insurance, the Fund may
invest more than 25% of its assets in securities insured by the same insurance company. If the Fund invests
in Municipal Securities backed by insurance companies and other financial institutions, changes in the financial
condition of these institutions could cause losses to the Fund and affect share price. Letters of credit
are issued by a third party, usually a bank, to enhance liquidity and ensure repayment of principal and any accrued
interest if the underlying Municipal Bond should default. These credit enhancements do not guarantee
payments or repayments on the Municipal Securities and a downgrade in the credit enhancer could
affect the value of the Municipal Security.
If the IRS determines that an issuer of a Municipal Security has not complied with
applicable tax requirements, interest from the security could be treated as taxable, which could
result in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate the current federal income tax exemption on Municipal Securities or otherwise
adversely affect the current federal or state tax status of Municipal Securities. For example, 2017 legislation
commonly known as the Tax Cuts and Jobs Act repeals the exclusion from gross income for interest on
pre-refunded municipal securities effective for such bonds issued after December 31, 2017.
Taxable municipal securities are debt securities issued by or on behalf of states
and their political subdivisions, the District of Columbia, and possessions of the United States, the
interest on which is not exempt from federal income tax. Taxable investments include, for example, hedging
instruments, repurchase agreements, and many of the types of securities the Fund would buy for temporary defensive
purposes.
At times, in connection with the restructuring of a municipal bond issuer either outside
of bankruptcy court in a negotiated workout or in the context of bankruptcy proceedings, the Fund may
determine or be required to accept equity or taxable debt securities, or the underlying collateral (which may
include real estate or loans) from the issuer in exchange for all or a portion of the Fund’s holdings in the municipal security. Although the Adviser will attempt to sell those assets as soon as reasonably practicable in most
cases, depending upon, among other things, the Adviser’s valuation of the potential value of such assets in relation to the price that could be obtained by the Fund at any given time upon sale thereof, the Fund may determine
to hold such securities or assets in its portfolio for limited period of time in order to liquidate
the assets in a manner that maximizes their value to the Fund.
Municipal Securities also include, but are not limited to, the following securities:
●
Bond Anticipation Notes usually are general obligations of state and local governmental
issuers which are sold to obtain interim financing for projects that will eventually be funded
through the sale of long-term debt obligations or bonds.
●
Revenue Anticipation Debt Securities, including bonds, notes, and certificates, are
issued by governments or governmental bodies with the expectation that future revenues from
a designated source will be used to repay the securities. In general, they also constitute general
obligations of the issuer.
●
Tax Anticipation Notes are issued by state and local governments to finance the current
operations of such governments. Repayment is generally to be derived from specific future tax revenues.
31
●
Tax-Exempt Commercial Paper (Municipal Paper) is similar to taxable commercial paper,
except that tax-exempt commercial paper is issued by states, municipalities and their agencies.
●
Tax-Exempt Mandatory Paydown Securities (TEMPS) are fixed rate term bonds carrying
a short-term maturity, usually three to four years beyond the expected redemption. TEMPS are structured
as bullet repayments, with required optional redemptions as entrance fees are collected.
●
Zero Coupon and Pay-in-Kind Securities do not immediately produce cash income. These
securities are issued at an original issue discount, with the full value, including accrued interest,
paid at maturity. Interest income may be reportable annually, even though no annual payments
are made. Market prices of zero coupon bonds tend to be more volatile than bonds that pay interest
regularly. Pay-in-kind securities are securities that have interest payable by delivery of additional
securities. Upon maturity, the holder is entitled to receive the aggregate par value of the securities.
Zero coupon and pay-in-kind securities may be subject to greater fluctuation in value and
less liquidity in the event of adverse market conditions than comparably rated securities paying cash
interest at regular interest payment periods. Prices on non-cash-paying instruments may be more
sensitive to changes in the issuer’s financial condition, fluctuation in interest rates and market demand/supply imbalances than cash-paying securities with similar credit ratings, and thus may be
more speculative. Special tax considerations are associated with investing in certain lower-grade
securities, such as zero coupon or pay-in-kind securities.
●
Capital Appreciation Bonds are municipal securities in which the investment return
on the initial principal payment is reinvested at a compounded rate until the bond matures. The principal
and interest are due on maturity. Thus, like zero coupon securities, investors must wait
until maturity to receive interest and principal, which increases the interest rate and credit risks.
●
Payments in lieu of taxes (also known as PILOTs) are voluntary payments by, for instance
the U.S. government or nonprofits, to local governments that help offset losses in or otherwise
serve as a substitute for property taxes.
●
Converted Auction Rate Securities (CARS) are a structure that combines the debt service
deferral feature of Capital Appreciation Bonds (CABS) with Auction Rate Securities. The CARS
pay no debt service until a specific date, then they incrementally convert to conventional Auction
Rate Securities. At each conversion date the issuer has the ability to call and pay down any amount
of the CARS.
Some bonds may be “callable,” allowing the issuer to redeem them before their maturity date. To protect bondholders, callable bonds may be issued with provisions that prevent them from being
called for a period of time. Typically, that is 5 to 10 years from the issuance date. When interest rates
decline, if the call protection on a bond has expired, it is more likely that the issuer may call the bond. If that
occurs, the Fund might have to reinvest the proceeds of the called bond in investments that pay a lower rate of
return, which could reduce the Fund’s yield.
Inverse Floating Rate Interests. Inverse floating rate interests (Inverse Floaters) are issued in connection with municipal tender option bond (TOB) financing transactions to generate leverage for the Fund. Such instruments are created by a special purpose trust (a TOB Trust) that holds long-term fixed rate bonds sold to it by the Fund (the underlying security), and issues two classes of beneficial interests: short-term floating rate interests (Floaters), which are sold to other investors, and Inverse Floaters, which are purchased by the Fund. The Floaters have first priority on the cash flow from the underlying security held
by the TOB Trust, have a tender option feature that allows holders to tender the Floaters back
to the TOB Trust for their par amount and accrued interest at specified intervals and bear interest at prevailing short-term interest rates.
Tendered Floaters are remarketed for sale to other investors for their par amount
and accrued interest by a remarketing agent to the TOB Trust and are ultimately supported by a liquidity facility
provided by a bank, upon which the TOB Trust can draw funds to pay such amount to holders of Tendered
Floaters that cannot be remarketed. The Fund, as holder of the Inverse Floaters, is paid the residual cash flow from the underlying security. Accordingly, the Inverse Floaters provide the Fund with leveraged exposure to the underlying security. When short-term interest rates rise or fall, the interest payable on the Floaters issued by a TOB Trust
32
will, respectively, rise or fall, leaving less or more, respectively, residual interest cash flow from the underlying security available for payment on the Inverse Floaters. Thus, as short-term interest rates rise, Inverse Floaters produce less income for the Fund, and as short-term interest rates decline, Inverse Floaters produce more income for the Fund. The price of Inverse Floaters is expected to decline when interest rates rise and increase when interest rates decline, in either case generally more so than the price of a bond with a similar maturity, because of the effect of leverage. As a result, the price of Inverse Floaters
is typically more volatile than the price of bonds with similar maturities, especially if the relevant TOB Trust
is structured to provide the holder of the Inverse Floaters relatively greater leveraged exposure to the underlying
security (e.g., if the par amount of the Floaters, as a percentage of the par amount of the underlying security,
is relatively greater). Upon the occurrence of certain adverse events (including a credit ratings downgrade of the underlying security or a substantial decrease in the market value of the underlying security),
a TOB Trust may be collapsed by the remarketing agent or liquidity provider and the underlying security
liquidated, and the Fund could lose the entire amount of its investment in the Inverse Floater and may, in
some cases, be contractually required to pay the shortfall, if any, between the liquidation value of the underlying
security and the principal amount of the Floaters. Consequently, in a rising interest rate environment, the Fund’s investments in Inverse Floaters could negatively impact the Fund’s performance and yield, especially when those Inverse Floaters provide the Fund with relatively greater leveraged exposure to the underlying securities held by the relevant TOB Trusts.
Final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Volcker Rule) prohibit banking entities and their affiliates from sponsoring and/or providing certain services to TOB Trusts, which constitute “covered funds” under the Volcker Rule. As a result of the Volcker Rule, the Fund, as holder of Inverse Floaters, is required to perform certain duties in connection with TOB financing transactions previously performed by banking entities. These duties may alternatively be performed by a non-bank third-party service provider. A Fund’s expanded role in TOB financing transactions as a result of the Volcker Rule may increase its operational and regulatory risk.
Further, the SEC and various banking agencies have adopted rules implementing credit
risk retention requirements for asset-backed securities (the Risk Retention Rules), which apply to
TOB financing transactions and TOB Trusts. The Risk Retention Rules require the sponsor of a TOB Trust, which is deemed
to be the Fund (as holder of the related Inverse Floaters), to retain at least 5% of the credit risk of the underlying security held by the TOB Trust. As applicable, the Fund has adopted policies
and procedures intended to comply with the Risk Retention Rules. The Risk Retention Rules may adversely affect the Fund’s ability to engage in TOB financing transactions or increase the costs of such transactions in certain circumstances.
There can be no assurances that TOB financing transactions will continue to be a viable or cost-effective form of leverage. The unavailability of TOB financing transactions or an increase in the cost of financing provided by TOB transactions may adversely affect the Fund’s net asset value, distribution rate and ability to achieve its investment objective.
Municipal Lease Obligations. Municipal lease obligations are issued by state and local governments or authorities to finance the acquisition of land, equipment and facilities, such as
state and municipal vehicles, telecommunications and computer equipment, and other capital assets. Municipal lease
obligations, which are a type of Municipal Security, may take the form of a lease, an installment purchase
contract or a conditional sales contract. Interest payments on qualifying municipal lease obligations
are generally exempt from federal income taxes.
Municipal lease obligations are generally subject to greater risks than general obligation
or revenue bonds. State laws set forth requirements that states or municipalities must meet in
order to issue municipal obligations, and such obligations may contain a covenant by the issuer to budget for,
appropriate, and make payments due under the obligation. However, certain municipal lease obligations may
contain "non-appropriation" clauses which provide that the issuer is not obligated to make payments on the obligation
in future years unless funds have been appropriated for this purpose each year. If not
enough money is appropriated to make the lease payments, the leased property may be repossessed as
security for holders of
33
the municipal lease obligation. In such an event, there is no assurance that the property's
private sector or re-leasing value will be enough to make all outstanding payments on the municipal
lease obligation or that the payments will continue to be tax-free. Additionally, it may be difficult to dispose
of the underlying capital asset in the event of non-appropriation or other default. Direct investments by the Fund
in municipal lease obligations may be deemed illiquid and therefore subject to the Fund's percentage
limitations for illiquid investments and the risks of holding illiquid investments.
Municipal Forward Contracts. A municipal forward contract is an agreement by a Fund to purchase a Municipal Security on a when-issued basis with a longer-than-standard settlement period,
in some cases with the settlement date taking place up to five years from the date of purchase. Municipal
forward contracts typically carry a substantial yield premium to compensate the buyer for the risks
associated with a long when-issued period, including shifts in market interest rates that could materially impact the
principal value of the bond, deterioration in the credit quality of the issuer, loss of alternative investment
options during the when-issued period and failure of the issuer to complete various steps required to issue the
bonds.
Investment Grade Debt Obligations. The Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations and U.S. commercial banks, U.S. dollar-denominated
obligations of foreign issuers or debt obligations of foreign issuers denominated in foreign currencies.
The Adviser considers investment grade securities to include: (i) securities rated
BBB- or higher by S&P or Baa3 or higher by Moody’s or an equivalent rating by another NRSRO, (ii) short-term securities with comparable NRSRO ratings, or (iii) unrated securities determined by the Adviser to
be of comparable quality, each at the time of purchase. The Adviser may rely to some extent on credit ratings
by NRSROs in evaluating the credit risk of securities selected for the Fund’s portfolio. Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do
not reflect any judgment of market risk. Ratings and market value may change from time to time, positively
or negatively, to reflect new developments regarding the issuer. Rating organizations might not change their credit
rating of an issuer in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. The Fund’s Adviser internally assigns ratings to unrated securities, after assessing their credit quality and other factors, in investment-grade or below-investment-grade categories similar to
those of NRSROs. There can be no assurance, nor is it intended, that the Fund’s Adviser’s credit analysis process is consistent or comparable with the credit analysis process used by a NRSRO. The descriptions of debt
securities ratings are found in Appendix A.
In choosing corporate debt securities on behalf of the Fund, portfolio managers may
consider:
i.
general economic and financial conditions;
ii.
the specific issuer’s (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions,
(e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic
or social conditions applicable to such issuer’s country; and,
iii.
other considerations deemed appropriate.
Debt securities are subject to a variety of risks, such as interest rate risk, income
risk, prepayment risk, inflation risk, credit risk, currency risk and default risk.
Non-Investment Grade Debt Obligations (Junk Bonds). Bonds rated below or determined to be below investment grade (as defined above in “Investment Grade Debt Obligations”) are commonly referred to as “junk bonds.” Analysis of the creditworthiness of junk bond issuers is more complex than that of investment-grade issuers and the success of the Adviser in managing these decisions is more dependent upon its own credit analysis than is the case with investment-grade bonds.
The capacity of junk bonds to pay interest and repay principal is considered speculative.
While junk bonds may provide an opportunity for greater income and gains, they are subject to greater
risks than higher-rated debt securities. The prices of and yields on junk bonds may fluctuate to a greater
extent than those of higher-rated debt securities. Junk bonds are generally more sensitive to individual issuer developments,
economic
34
conditions and regulatory changes than higher-rated bonds. Issuers of junk bonds are
often smaller, less-seasoned companies or companies that are highly leveraged with more traditional methods of
financing unavailable to them. Junk bonds are generally at a higher risk of default because
such issues are often unsecured or otherwise subordinated to claims of the issuer’s other creditors. If a junk bond issuer defaults, the Fund may incur additional expenses to seek recovery. The secondary markets in
which junk bonds are traded may be thin and less liquid than the market for higher-rated debt securities
and the Fund may have difficulty selling certain junk bonds at the desired time and price. Less liquidity
in secondary trading markets could adversely affect the price at which the Fund could sell a particular junk bond,
and could cause large fluctuations in the net asset value of that Fund’s shares. The lack of a liquid secondary market may also make it more difficult for the Fund to obtain accurate market quotations in valuing junk
bond assets and elements of judgment may play a greater role in the valuation.
Distressed Debt Securities. Distressed debt securities are securities that are the subject of bankruptcy proceedings or otherwise in default or in risk of being in default as to the repayment
of principal and/or interest at the time of acquisition by a Fund or that are rated in the lower rating
categories by one or more nationally recognized statistical rating organizations (for example, Ca or lower by Moody’s and CC or lower by S&P or Fitch) or, if unrated, are in the judgment of the Adviser or Sub-Adviser of
equivalent quality (“Distressed Securities”). Investment in Distressed Securities is speculative and involves significant risks. Each Fund will generally make such investments only when the Adviser or Sub-Adviser
believes it is reasonably likely that the issuer of the Distressed Securities will make an exchange
offer or will be the subject of a plan of reorganization pursuant to which a Fund will receive new securities in
return for the Distressed Securities. However, there can be no assurance that such an exchange offer will be
made or that such a plan of reorganization will be adopted. Additionally, a significant period of time may
pass between the time at which a Fund makes its investment in Distressed Securities and the time that any such exchange
offer or plan of reorganization is completed, if at all. During this period, it is unlikely that a
Fund would receive any interest payments on the Distressed Securities, a Fund will be subject to significant uncertainty
as to whether or not the exchange offer or plan of reorganization will be completed and a Fund may be required
to bear certain extraordinary expenses to protect and recover its investment. Therefore, a Fund’s ability to achieve current income for its shareholders may be diminished. Each Fund also will be subject to significant
uncertainty as to when and in what manner and for what value the obligations evidenced by the distressed
securities will eventually be satisfied (e.g., through a liquidation of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed securities or a payment of some amount in
satisfaction of the obligation). Even if an exchange offer is made or plan of reorganization is adopted
with respect to Distressed Securities held by a Fund, there can be no assurance that the securities or other
assets received by the Fund in connection with such exchange offer or plan of reorganization will not have a lower
value or income potential than may have been anticipated when the investment was made or no value.
Moreover, any securities received by a Fund upon completion of an exchange offer or plan of reorganization
may be restricted as to resale. Similarly, if a Fund participates in negotiations with respect
to any exchange offer or plan of reorganization with respect to an issuer of Distressed Securities, a Fund
may be restricted from disposing of such securities. To the extent that a Fund becomes involved in such proceedings,
the Fund may have a more active participation in the affairs of the issuer than that assumed generally
by an investor. Each Fund, however, will not make investments for the purpose of exercising day-to-day
management of any issuer’s affairs.
Structured Notes and Indexed Securities. The Fund may invest in structured notes or other indexed securities. Structured notes are derivative debt instruments, the interest rate or
principal of which is linked to currencies, interest rates, commodities, indices or other financial indicators (reference
instruments). Indexed securities may include structured notes and other securities wherein the interest
rate or principal is determined by a reference instrument.
Most structured notes and indexed securities are fixed income securities that have
maturities of three years or less. The interest rate or the principal amount payable at maturity of an
indexed security may vary based on changes in one or more specified reference instruments, such as a floating
interest rate compared with a fixed interest rate. The reference instrument need not be related to the terms
of the indexed security.
35
Structured notes and indexed securities may be positively or negatively indexed (i.e.,
their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates),
and may have return characteristics similar to direct investments in the underlying reference instrument
or to one or more options on the underlying reference instrument.
Structured notes and indexed securities may entail a greater degree of market risk
than other types of debt securities because the investor bears the risk of the reference instrument. Structured
notes or indexed securities also may be more volatile, less liquid, and more difficult to accurately
price than less complex securities and instruments or more traditional debt securities. In addition to the
credit risk of the structured note or indexed security’s issuer and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease
as a result of changes in the value of the underlying reference instruments. Further, in the case of certain
structured notes or indexed securities in which the interest rate, or exchange rate in the case of currency, is
linked to a reference instrument, the rate may be increased or decreased or the terms may provide that,
under certain circumstances, the principal amount payable on maturity may be reduced to zero resulting
in a loss to the Fund.
U.S. Corporate Debt Obligations. Corporate debt obligations are debt obligations issued or guaranteed by corporations that are denominated in U.S. dollars. Such investments may include,
among others, commercial paper, bonds, notes, debentures, variable rate demand notes, master notes,
funding agreements and other short-term corporate instruments. Commercial paper consists of short-term
promissory notes issued by corporations. Commercial paper may be traded in the secondary market after its
issuance. Variable rate demand notes are securities with a variable interest which is readjusted on pre-established
dates. Variable rate demand notes are subject to payment of principal and accrued interest (usually
within seven days) on the Fund’s demand. Master notes are negotiated notes that permit the investment of fluctuating amounts of money at varying rates of interest pursuant to arrangements with issuers who meet
the credit quality criteria of the Fund. The interest rate on a master note may fluctuate based upon changes in specified
interest rates or be reset periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand feature, the payee may demand
payment of the principal amount of the note upon relatively short notice. Funding agreements are
agreements between an insurance company and the Fund covering underlying demand notes. Although there is
no secondary market in funding agreements, if the underlying notes have a demand feature, the payee may
demand payment of the principal amount of the note upon relatively short notice. Master notes and funding
agreements are generally illiquid and therefore subject to the Fund's percentage limitation for illiquid
investments.
Duration and Maturity of the Fund’s Portfolio. Duration is a measure of the expected life of a security on a current-value basis expressed in years, using calculations that consider the security’s yield, coupon interest payments, final maturity and call features.
While a debt security’s maturity can be used to measure the sensitivity of the security’s price to changes in interest rates, the term to maturity of a security does not take into account the
pattern (or expected pattern) of the security’s payments of interest or principal prior to maturity. Duration, on the other hand, measures the length of the time interval from the present to the time when the interest and principal
payments are scheduled to be received (or, in the case of a mortgage-related security, when the
interest and principal payments are expected to be received). Duration calculations weigh the present value
of each such payment by the time in years until such payment is expected to be received. If the interest
payments on a debt security occur prior to the repayment of principal, the duration of the security is less than
its stated maturity. For zero-coupon securities, duration and term to maturity are equal. Absent other factors, the lower
the stated or coupon rate of interest on a debt security or the longer the maturity or the lower
the yield-to-maturity of the debt security, the longer the duration of the security. Conversely, the higher the
stated or coupon rate of interest, the shorter the maturity or the higher the yield-to-maturity of a debt security,
the shorter the duration of the security.
36
Futures, options and options on futures in general have durations that are closely
related to the duration of the securities that underlie them. Holding long futures positions or call option
positions (backed by liquid assets) will tend to lengthen the portfolio’s duration.
In some cases the standard effective duration calculation does not properly reflect
the interest rate exposure of a security. For example, floating and variable rate securities often have
final maturities of ten or more years. However, their exposure to interest rate changes corresponds to the frequency
of the times at which their interest coupon rate is reset. In the case of mortgage pass-through securities,
the stated final maturity of the security is typically 30 years, but current rates of prepayments are
more important to determine the security’s interest rate exposure. In these and other similar situations, the investment adviser will use other analytical techniques that consider the economic life of the security as well
as relevant macroeconomic factors (such as historical prepayment rates) in determining the Fund’s effective duration.
Loans, Loan Participations and Assignments.
How the Fund Invests in Loans. The Fund may invest in loans in one or more of three
ways: the Fund may invest directly in a loan by acting as an original lender; the Fund may invest
directly in a loan by purchasing a loan by an assignment from an agent or other lender; or the Fund may
invest indirectly in a loan by purchasing a participation interest in a loan from an agent or other lender. The
Fund may also gain exposure to loans indirectly using certain derivative instruments, which is discussed
elsewhere in this SAI.
●
Original
Lender. The Fund can invest in loans, generally “at par” (a price for the loan equal approximately to 100% of a funded
principal amount of the loan, minus any original issue discount) as an original lender. When the Fund is an original lender, it is entitled
to receive a return at the full interest rate for the loan. When the Fund is an original lender (including as one of a group of original lenders), it is entitled to receive a return at the full interest rate for the loan. When the Fund is an original lender, it may participate in structuring the loan and have a direct contractual relationship with the borrower, may enforce compliance by the borrower with the terms of the loan agreement and may have rights with respect to any funds acquired by other lenders through set-offs.
●
Assignments. The Fund may also purchase a loan by assignment. When the Fund purchases a loan by assignment, it typically succeeds to whatever rights and obligations the assigning
lender had under the loan agreement and becomes a “lender” under the loan agreement, entitled to the same rights (including, but not limited to, enforcement or set-off rights) that are available
to lenders generally. However, because assignments are arranged through private negotiations
between potential assignees and potential assignors, the rights and obligations acquired by
the Fund as the purchaser of an assignment may differ from, and be more limited than, those held by
the assigning lender. In addition, if the loan is foreclosed, the Fund could be part owner of any
collateral and could bear the costs and liabilities of owning and disposing of the collateral.
●
Participation
Interests. These investments represent an undivided, indirect interest in a loan obligation of a borrower. They are typically
purchased from banks or dealers that have made the loan or are members of the loan syndicate. The participation seller remains as lender
of record, and continues to face the borrower, the agent, and the other parties to the loan agreement, while the Fund generally acquires
beneficial ownership of the loan. When the Fund buys a participation interest, it assumes the credit risk of the borrower and the counterparty
risk of the lender selling the participation interest (and, in certain circumstances, such lender’s credit risk), and the terms
of the participation may not entitle the Fund to all rights of a direct lender under the loan (for example, with respect to consent,
voting or enforcement rights). Therefore, the Fund’s rights under a participation interest for a particular loan may be more limited
than the rights of the original lender or an investor who acquires an assignment of that loan.
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Floating Rate Corporate Loans and Corporate Debt Securities. Floating rate loans consist generally of obligations of companies and other entities (collectively, borrowers) incurred
for the purpose of reorganizing the assets and liabilities of a borrower; acquiring another company; taking over control
of a company (leveraged buyout); temporary refinancing; or financing internal growth or other general
business purposes. Floating rate loans are often obligations of borrowers who have incurred a significant
percentage of debt compared to equity issued and thus are highly leveraged.
Floating rate loans may include both term loans, which are generally fully funded at the time of the Fund’s investment, and revolving loans, which may require the Fund to make additional investments
in the loans as required under the terms of the loan agreement. A revolving credit loan agreement
may require the Fund to increase its investment in a loan at a time when the Fund might not otherwise have
done so, even if the borrower’s condition makes it unlikely that the loan will be repaid.
A floating rate loan is generally offered as part of a lending syndicate to banks
and other financial institutions and is administered in accordance with the terms of the loan agreement
by an agent bank who is responsible for collection of principal and interest and fee payments from the borrower
and apportioning those payments to all lenders who are parties to the agreement. Typically, the agent is
given broad discretion to enforce the loan agreement and is compensated by the borrower for its services.
Floating rate loans may be acquired by direct investment as a lender at the inception
of the loan or by assignment of a portion of a floating rate loan previously made to a different lender
or by purchase of a participation interest. If the Fund makes a direct investment in a loan as one of
the lenders, it generally acquires the loan at par. This means the Fund receives a return at the full interest
rate for the loan. If the Fund acquires its interest in loans in the secondary market or acquires a participation
interest, the loans may be purchased or sold above, at, or below par, which can result in a yield that is below,
equal to, or above the stated interest rate of the loan. At times, the Fund may be able to invest in floating
rate loans only through assignments or participations.
Historically, floating rate loans have not been registered with the SEC or any state
securities commission or listed on any securities exchange. As a result, the amount of public information
available about a specific floating rate loan has been historically less extensive than if the floating rate
loan were registered or exchange traded.
Floating rate debt securities are typically in the form of notes or bonds issued in
public or private placements in the securities markets. Floating rate debt securities will typically
have substantially similar terms to floating rate loans, but will not be in the form of participations or assignments.
The floating rate loans and debt securities in which the Fund invests will, in most
instances, be secured and senior to other indebtedness of the borrower. Each floating rate loan and debt
security will generally be secured by collateral
38
The value of collateral may decline after the Fund’s investment, and collateral may be difficult to sell in the event of default. Consequently, the Fund may not receive all the payments to
which it is entitled. The Fund’s assets may be invested in unsecured floating rate loans and debt securities or subordinated floating rate loans and debt securities, which may or may not be secured. If the borrower defaults
on an unsecured loan or security, there is no specific collateral on which the lender can foreclose.
If the borrower defaults on a subordinated loan or security, the collateral may not be sufficient to cover both
the senior and subordinated loans and securities.
Most borrowers pay their debts from cash flow generated by their businesses. If a borrower’s cash flow is insufficient to pay its debts, it may attempt to restructure its debts rather than
sell collateral. Borrowers may try to restructure their debts by filing for protection under the federal bankruptcy laws
or negotiating a work-out. If a borrower becomes involved in a bankruptcy proceeding, access to collateral may be
limited by bankruptcy and other laws. If a court decides that access to collateral is limited or voidable,
the Fund may not recover the full amount of principal and interest that is due.
The degree to which borrowers
prepay floating rate loans and debt securities, whether as a contractual requirement or at the borrower’s election, may be affected by general business conditions, the borrower’s financial condition and competitive conditions among lenders. Prepayments cannot be predicted with accuracy. Prepayments may result in the Fund’s investing in floating rate loans and debt securities with lower yields.
Public Bank Loans. Public bank loans are privately negotiated loans for which information about the
issuer has been made publicly available. Public loans are made by banks or other financial
institutions, and may be rated investment grade (as defined in “Investment Grade Debt Obligations”) or below investment grade. However, public bank loans are not registered under the 1933 Act and are not
publicly traded. They usually are second lien loans normally lower in priority of payment to senior loans,
but have seniority in a company’s capital structure to other claims, such as subordinated corporate bonds or publicly-issued equity so that in the event of bankruptcy or liquidation, the company is required to pay
down these second lien loans prior to such other lower-ranked claims on their assets. Bank loans normally pay floating
rates that reset frequently.
Bank
loans generally are negotiated between a borrower and several financial institutional lenders represented
by one or more lenders acting as agent of all the lenders. The agent is responsible for negotiating the loan agreement that establishes
the terms and conditions of the loan and the rights of the borrower and the lenders, monitoring any collateral, and collecting principal
and interest on the loan. By investing in a loan, the Fund becomes a member of a syndicate of lenders.
39
Bank
loans are subject to the risk of default. Default in the payment of interest or principal on a loan will result
in a reduction of income to the Fund, a reduction in the value of the loan, and a potential decrease in the Fund’s net asset value.
The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. Bank loans are subject
to the risk that the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled
payments. As discussed above, however, because bank loans reside higher in the capital structure than high yield bonds, default losses
have been historically lower in the bank loan market.
Senior Loans and Other Loans. The Fund may invest in loans, and in particular, in floating rate loans (sometimes referred to as “adjustable” rate loans) that hold (or in the judgment of the Adviser, hold) a senior position in the capital structure of U.S. and foreign corporations, partnerships or
other business entities that, under normal circumstances, allow them to have priority of claim ahead of (or at least
as high as) other obligations of a borrower in the event of liquidation. These investments are referred to as “Senior Loans” in this SAI.
Senior Loans typically have higher recoveries than other debt obligations that rank
lower in the priority of payments for a particular debtor, because in most instances they take preference over
those subordinated debt obligations, with respect to payment of interest and principal, and over stock.
However, the Fund is still subject to the risk that the borrower under a loan will default on scheduled interest
or principal payments and that the assets of the borrower to which the Fund has recourse will be insufficient
to satisfy in full the payment obligations that the borrower has to the Fund. The risk of default will increase in
the event of an economic downturn or, in the case of a floating rate loan, a substantial increase in interest
rates (because the cost of the borrower’s debt service will increase as the interest rate on its loan is upwardly adjusted). The Fund may own a debt obligation of a borrower that becomes, or is about to become, insolvent. The
Fund can also purchase debt obligations that are extended to a bankrupt entity (so called debtor-in-possession or ‘DIP’ financing) or debt obligations that are issued in connection with a restructuring of the borrower
under bankruptcy laws.
Loans typically are arranged through private negotiations between a borrower and one
or more financial institutions (i.e., lenders). Usually the lenders are represented by an agent, which
usually is one of the lenders. The borrowers may use the proceeds of loans to finance leveraged buyouts,
recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings, or for other purposes.
Agents typically are commercial or investment banks that originate loans and invite other parties to join
the lending syndicate. In larger transactions, it is common to have several agents. However, only one agent
usually has primary responsibility for documentation and administration of the loan. Agents are normally
paid fees by the borrower for their services. While the Fund can serve as the agent or co-agent for a loan,
the Fund currently does not intend to act as an agent or co-agent. Agents, acting on behalf of the lenders, generally
are primarily responsible for negotiating the loan agreement, which establishes the terms and conditions
of the loan and the rights of the borrower and the lenders. The Fund will rely on agents to collect
payments of principal and interest on a loan. The Fund also will rely in part on agents to monitor compliance
by the borrower with the restrictive covenants in the loan agreement and to notify the Fund (or the lender
from whom the Fund has purchased a participation) of any adverse change in the borrower’s financial condition.
The Funds have no limits as to the maturity of other loans in which they invest or
as to the market capitalization range of the borrowers. The Funds can invest a variable amount of each
of their net assets in investments rated below “B.”
Investments in Pooled Investment Entities that Invest in Loans. The Fund can also buy interests in trusts and other pooled entities (including other investment companies) that invest
primarily or exclusively in loan obligations, including entities sponsored or advised by the Adviser or an affiliate.
The Fund will be subject to the pooled entity’s credit risks as well as the credit risks of the underlying loans. The loans underlying these investments may include loans to foreign or U.S. borrowers, may be collateralized
or uncollateralized and may be rated investment grade or below investment-grade or may be unrated. These investments
are subject to the risk of default by the borrower, interest rate and prepayment risk, as well as
credit risks of the pooled entity that holds the loan obligations.
40
Highly Leveraged Transactions and Insolvent Borrowers. The Fund can invest in loans made in connection with highly leveraged transactions. These transactions may include operating loans, leveraged buyout loans, leveraged capitalization loans and other types of acquisition financing.
Those loans are subject to greater credit risks than other loans. Highly leveraged loans and loans in default
also may be less liquid than other loans. Highly leveraged loans and loans in default also may be less liquid than other loans. If the Fund voluntarily or involuntarily sold those types of loans, it might not receive
the full value it expected.
The Fund can also invest in loans of borrowers that are experiencing, or are likely
to experience, financial difficulty. In addition, the Fund can invest in loans of borrowers that have filed
for bankruptcy protection or that have had involuntary bankruptcy petitions filed against them by creditors. Various
laws enacted for the protection of debtors may apply to loans. A bankruptcy proceeding against a borrower
could delay or limit the ability of the Fund to collect the principal and interest payments on that borrower’s loans. If a lawsuit is brought by creditors of a borrower under a loan, a court or a trustee in bankruptcy
could take certain actions that would be adverse to the Fund. For example:
●
Other creditors might convince the court to set aside a loan or the collateralization
of the loan as a “fraudulent conveyance” or “preferential transfer.” In that event, the court could recover from the Fund the interest and principal payments that the borrower made before becoming insolvent.
There can be no assurance that the Fund would be able to prevent that recapture.
●
A bankruptcy court may restructure the payment obligations under the loan so as to
reduce the amount to which the Fund would be entitled.
●
The court might discharge the amount of the loan that exceeds the value of the collateral
or assets to which the lenders have recourse.
●
The court could subordinate the Fund’s rights to the rights of other creditors of the borrower under applicable law.
Companies involved in significant restructuring tend to be subject to increased litigation risk, including for investors in these companies, such as the Funds. Expenses of asserting, or defending against, claims in connection with such restructurings are generally directly or indirectly borne by the Funds. See also “Litigation Risk” herein.
Delayed Draw Loans. There may be obligations under a loan agreement to make disbursements of loans after the initial disbursement in certain circumstances, for example if the loan was partially “unfunded” at the time the Fund invested or if there otherwise is an ongoing commitment from the
lenders to disburse further loans. The Fund will not purchase a loan that would require the Fund to make additional loans
unless it reasonably believes, at the time it enters into such loan agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitments, in each case as they come due.
General risks associated with loans:
The use by the Funds of loans involves special considerations and risks, as described
below:
Fees. The Fund may be required to pay and may receive various fees and commissions
in connection with purchasing, selling and holding interests in loans. Borrowers typically pay three
kinds of fees to lenders: facility fees (which may be structured as original issue discount) when a loan is
originated; commitment fees on an ongoing basis based on the unused portion of a loan commitment; and prepayment
penalties when a borrower prepays a loan.
The Fund receives these fees directly from the borrower if the Fund is an original
lender or, in the case of commitment fees and prepayment penalties, if the Fund acquires an assignment. Whether
the Fund receives
41
a facility fee in the case of an assignment or participation interest depends on negotiations
between the Fund and the lender selling the interests.
When the Fund buys an assignment or a participation, it may be required to pay a fee, or cede a portion of the interest and fees that accrued prior to settlement of the assignment, to the lender selling the assignment or the participant. Occasionally, the selling lender pays a fee to the assignee or the participant. If the Fund assigns a loan or sells a participation, it may be required to pass along to a buyer a portion of any interest and fees that the Fund would otherwise be entitled to. In addition, in the case of an assignment, the Fund may be required to pay a transfer fee to the lending agent. If the Fund sells a participation Interest, the Fund may be required to pay a transfer fee to the lender that holds the nominal interest
in the loan.
Delayed Settlement. Compared to securities and to certain other types of financial assets, purchases, and sales of loans, including via participation, take relatively longer to settle.
This is partly due to the nature of loans, which require a written assignment agreement and various ancillary documents
for each transfer, and frequently require discretionary consents from both the borrower and the administrative
agent. In addition, dealers frequently insist on matching their purchases and sales, which can lead to delays in the Fund’s settlement of a purchase or sale in circumstances where the dealer’s corresponding transaction with another party is delayed. Dealers will also sometimes sell loans short, and hold their trades
open for an indefinite period while waiting for a price movement or looking for inventory to purchase.
This extended settlement process can (i) increase the counterparty credit risk borne
by the Fund; (ii) leave the Fund unable to timely vote, or otherwise act with respect to, loans it has
agreed to purchase; (iii) delay the Fund from realizing the proceeds of a sale of a loan; (iv) inhibit the Fund’s ability to re-sell a loan that it has agreed to purchase if conditions change (leaving the Fund more exposed
to price fluctuations); (v) prevent the Fund from timely collecting principal and interest payments; and (vi)
expose the Fund to adverse tax or regulatory consequences.
The Loan Syndications and Trading Association (LSTA) has promulgated a “delay compensation” provision in its standard loan documentation that mitigates the direct risk of permanently
losing interest payments as a result of delayed settlement by causing interest to begin to accrue for the buyer’s account after the seventh business day following the trade date (for distressed trades, the twentieth
business day). However, this does not mitigate the other risks of delayed settlement. In addition,
the mechanism itself can result in opportunistic behavior: A seller, having locked in its trade, might delay
closing for seven business days in order to maximize its interest collections, even if it could have closed earlier,
while a buyer may no longer feel any pressure to close at all, since interest is accruing for its benefit,
and may choose to use its cash elsewhere. The LSTA has further attempted to put an outer limit on long, unjustified
settlement delays by promulgating “buy-in/sell-out” provisions that allow a party to enter into a “cover” trade if the other party refuses to close. However, these provisions are complicated, time-consuming, and little-used,
and are in any event not triggered until the fifteenth business day after the trade date (for distressed
trades, the fiftieth business day). To the extent the extended loan settlement process gives rise to short-term liquidity
needs, such as the need to satisfy redemption requests, the Fund may hold cash, sell investments
or temporarily borrow from banks or other lenders.
Interest
Rate Benchmarks for Floating Rate Loans.
The loans in which the Fund invests typically have floating or adjustable interest rates. For that reason, the Adviser expects that when
interest rates change, the values of these floating rate loans will fluctuate less than the values of fixed-rate debt securities, and
that the net asset values of the Fund’s shares will fluctuate less than the shares of funds that invest mainly in fixed- rate debt
obligations. However, the interest rates of some floating rate loans adjust only periodically. Between the times that interest rates
on floating rate loans adjust, the interest rates on those floating rate loans may not correlate to prevailing interest rates. That
will affect the value of the loans and may cause the net asset values of the Fund’s shares to fluctuate.
The applicable rate is defined in the loan agreement. Borrowers tend to select the
base lending rate that results in the lowest interest cost, and the benchmark selected by a borrower for
its loans may change from time to time (but the benchmark selected for a particular loan will remain the same
for the life of that loan). If
42
the benchmark interest rate on a floating rate loan changes, the rate payable to lenders
under the floating rate loan will, in turn, change at the next scheduled adjustment date. If the benchmark
rate increases, the Fund would earn interest at a higher rate on that floating rate loan after the next scheduled
adjustment date. If the benchmark rate decreases, the Fund would earn interest at a lower rate on that floating
rate loan after the next scheduled adjustment date.
The Fund may use interest rate swap agreements and other hedging practices to mitigate
fluctuations in value when the interest rate under the loan is periodically reset. The Fund may invest
in loans having a fixed rate of interest; however, it is unlikely to do so because fixed rate loans are uncommon
in the loan market generally.
Interest rates on floating rate loans adjust periodically based on a benchmark rate
plus a premium or spread over the benchmark rate. The benchmark rate usually is the Prime Rate, the
Federal Reserve federal funds rate, SOFR (or, previously LIBOR) or other base lending rates used by commercial
lenders (each as defined in the applicable loan agreement).
●
The Prime Rate quoted by a major U.S. bank is generally the interest rate at which
that bank is willing to lend U.S. dollars to its most creditworthy borrowers, although it may not be the bank’s lowest available rate.
●
The Federal Reserve federal funds rate is the rate that the Federal Reserve Bank charges
member banks for borrowing money.
●
The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate for dollar-denominated
loans that generally replaced the London Interbank Offered Rate (LIBOR) effective
July 1, 2023, and is calculated using data from overnight Treasury repurchase market activity (Treasuries
loaned or borrowed overnight). SOFR is published every business day by the U.S. Federal Reserve
Bank of New York. The interest rate on SOFR based loans may reset daily, monthly or quarterly,
or may be computed for a monthly or quarterly period on the basis of an average of daily SOFR
observed over that monthly or quarterly period.
The interest rate on SOFR-based loans may reset daily, monthly or quarterly, or may be computed for a monthly or quarterly
period on the basis of an average of daily SOFR observed over that monthly or quarterly period. Quarterly interest periods are most
common for floating rate loans in which the Fund invests. Certain floating or variable rate loans may permit the borrower to select an
interest rate reset period of up to one year (although interest periods longer than six months will often require lender consent).
Investing in loans with longer interest rate reset periods or fixed interest rates may increase fluctuations in the Fund’s net asset value
as a result of changes in market interest rates: falling short-term floating interest rates tend to decrease the income payable to the
Fund on its floating rate loan investments, and rising short-term floating interest rates tend to increase that income. However, the Fund
may attempt to hedge its fixed rate loans against interest rate fluctuations by entering into interest rate swaps or total return swap
transactions. Nevertheless, changes in interest rates can affect the value of the Fund’s floating rate loans, especially if rates change
sharply in a short period, because the resets of the interest rates on the underlying portfolio of floating rate loans occur periodically
and will not all happen simultaneously with changes in prevailing rates.
43
In addition, in market conditions where short term interest rates are particularly low, certain
floating rate loans may be issued with a feature that prevents the relevant benchmark rate from
adjusting below a specified minimum level. This is achieved by defining a “floor” to the benchmark rate, so that if downward market movements of the benchmark rate would, absent this feature, cause the benchmark rate to fall below the floor, with this feature, the benchmark rates of these floating rate loans become
fixed at the applicable minimum floor level until short term interest rates (and therefore the benchmark rate)
rise above that level. Although this feature is intended to result in these floating rate loans yielding
more than they otherwise would when short term interest rates are low, the feature might also result in the secondary market prices of these floating rate loans becoming more sensitive to changes in interest rates should short term interest rates rise.
Credit
Quality Standards for Loans. Debt securities rated below
“BBB-” by S&P or “Baa3” by Moody’s are commonly referred to as “high risk” securities or,
in the case of bonds, “junk bonds.” Loans rated “B” are below investment grade and are regarded by rating organizations
as predominantly speculative with respect to the borrower’s ability to repay interest and principal when due over a long period. The Fund may invest in loans that are rated both investment grade and below-investment grade by rating organizations.
An appendix to the Fund’s Statement of Additional Information includes the definitions of the rating categories of the principal
rating organizations. Many loans are not rated by rating organizations. The lack of a rating does not necessarily imply that a loan is
of lesser investment quality.
44
Limited Public Information. While the Fund expects to have access to financial and other information regarding
the borrower that has been made available to the lenders under a loan, it may not have such information
in connection with participation interests and certain loan assignments. Additionally, the amount of
public information available with respect to loans generally will be less extensive than what is available for
exchange-listed or otherwise registered securities.
Potential Material Non-Public Information. In certain cases, the Fund’s Adviser or Sub-Adviser may receive material, non-public information regarding loans, and its ability to trade in such loans for the account of the Fund
could potentially be limited by its possession of such information. Such limitations on the Fund’s Adviser or Sub-Adviser’s ability to trade could have an adverse effect on the Fund by, for example, preventing the Fund from
selling a loan that is experiencing a material decline in value. In some instances, these trading restrictions
could continue in effect for a substantial period of time.
Prepayment.
Because of prepayments, the actual remaining maturity of
a loan may be considerably less than its stated maturity. Notwithstanding their stated maturity, loans may be prepaid prior to their
stated terms for reasons including, but not limited to, high market demand for loans, refinancing by the borrower, mandatory prepayment
requirements or desire of the borrower to repay outstanding debt. If a borrower prepays a loan, the proceeds will have to be reinvested
in other loans or financial assets that may pay lower rates of return.
The reinvestment by the Fund of the proceeds of prepaid loans could result in a reduction
of income to the Fund in falling interest rate environments. Prepayment penalty fees that may be
assessed in some cases may help offset the loss of income to the Fund in those cases.
Subordination. Senior loans typically hold the most senior position in a borrower’s capital structure. They may include loans that hold the most senior position alone, loans that hold an equal
ranking with other senior debt, or loans that are, in the judgment of the Adviser, in the category of senior
debt of the borrower. Borrowers typically are required contractually to pay the holders of senior loans
before they pay the holders of subordinated debt and preferred or common shareholders and give the holders of senior
secured loans a claim on some or all of the borrower’s assets that is senior to that of subordinated debt, preferred stock and common stock of the borrower in the event that the borrower defaults or becomes bankrupt.
Lenders obtain priority liens that typically provide the first right to cash flows or proceeds from the sale of a borrower’s collateral, if any, if the borrower becomes insolvent. That right is subject to the
limitations of bankruptcy law, which may provide higher priority to certain other claims such as, for example, employee
salaries, employee pensions and taxes. Senior loans are subject to the risk that a court could subordinate
a senior loan to presently existing or future indebtedness or take other action detrimental to the
holders of senior loans.
That senior position in the borrower’s capital structure typically gives the holders of senior loans a claim on some or all of the borrower’s assets that is senior to that of subordinated debt, preferred stock and common stock of the borrower in the event that the borrower defaults or becomes bankrupt.
This means in the event the assets of the borrower are insufficient in value to satisfy all its creditors,
senior debt will be satisfied in priority to debt that is subordinate to senior debt.
Lien Position. Loans that are collateralized may have multiple lenders or other creditors that take
different lien positions. This means that if the borrower defaults on its obligations
under the loan and the loan creditors enforce their security interest or if the borrower becomes bankrupt, the
secured claims of the creditors in the first lien position will be satisfied prior to the secured claims
of the creditors in the second lien position. While second lien loan positions generally are subject to similar risks
as those associated with
45
investments in first lien loan positions, second lien loan positions have the additional
risk that if the borrower defaults on its obligations under the loan and the loan creditors enforce their security
interest or if the borrower becomes bankrupt, the secured claims of the creditors in the first lien position
will be satisfied prior to the secured claims of the creditors in the second lien position. If the cash flow
and assets of the borrower are insufficient to satisfy both the first lien loans and the second lien loans in
full, the creditors in the second lien position may not be satisfied in full. Intercreditor arrangements that are often
present where a loan has first and second lien positions typically include ‘standstill’ provisions whereby the enforcement rights of second lien creditors are restricted in favor of the first lien creditors’ rights and give the first lien creditors the right to accept or reject any restructuring plans in the event of the default or insolvency
of the borrower. If a loan has first and second lien positions, typically the Fund will invest in the first lien
position; however, it may invest in the second lien position. Second lien positions generally pay a higher margin than
first lien positions to compensate second lien creditors for the greater risk they assume.
Collateral.
Loans, like other debt obligations, are subject to the risk of the borrower’s non-payment of scheduled
interest and/or principal. While certain of the Fund’s investments in loans may be secured by collateral
that the Adviser or Sub-Adviser believes to be equal to or in excess of the principal amount of the loan at the
time of investment, there can be no assurance that the liquidation of such collateral, if any, would satisfy the
borrower’s obligations in the event of non-payment of scheduled interest or principal payments, or that the collateral
could be readily liquidated. In the event of a borrower’s bankruptcy, the Fund could experience delays
or limitations in its ability to realize the benefits of collateral securing a loan.
For the loans in which the Fund invests that are secured by collateral, that collateral may include the borrower’s tangible assets, such as cash, accounts receivable, inventory, real estate, buildings, and equipment, common and/or preferred stock of subsidiaries, and intangible assets including trademarks, copyrights, patent rights and franchise value. The Fund may also receive guarantees
or other credit support as a form of security. A loan agreement may or may not require the borrower to pledge additional collateral
to secure a loan if the value of the initial collateral declines, or if additional assets are acquired by the borrower. Collateral may consist of assets that may not be readily liquidated, and there is no assurance that the liquidation of those assets would satisfy in full a borrower’s obligations under a loan. A borrower’s subsidiaries, affiliates, shareholders, or owners may provide collateral in the form
of secured guarantees and/or security interests in assets that they own. However, the value of the collateral
may decline after the Fund invests in the loan, particularly if the collateral consists of equity securities
of the borrower or its subsidiaries or affiliates. If the collateral consists of stock of the borrower or
its subsidiaries or affiliates, the stock may lose all of its value in the event of a bankruptcy, which would leave the
Fund exposed to greater potential loss.
If a borrower defaults, insolvency laws may limit the Fund’s access to the collateral, or the lenders may be unable to liquidate the collateral. A bankruptcy court might find that the lenders’ security interest or their enforcement of their security under the loan to be invalid, or a bankruptcy court
may require the borrower to use the collateral to pay other outstanding obligations prior to satisfying the lenders
in full. If the collateral consists of stock of the borrower or its subsidiaries, the stock may lose all of its
value in the event of a bankruptcy, which would leave the Fund exposed to greater potential loss. In addition,
in the event of a borrower default on a collateralized loan, the Fund may receive assets other than
cash or securities in full or partial satisfaction of the borrower’s obligation under the loan. Those assets may be illiquid, and the Fund might not be able to realize the benefit of the assets for legal, practical or other
reasons. The Fund might hold those assets until the Adviser determines it is appropriate to dispose of them. If
the collateral becomes illiquid or loses some or all of its value, the collateral may not be sufficient in value to
compensate the Fund in full in the event of a default of scheduled interest or principal payments.
The Fund can invest in loans that are not secured by any specific collateral of the
borrower. If the borrower is unable to pay interest or defaults in the payment of principal, there
will be no collateral on which the Fund can foreclose. Therefore, these loans present greater risks than collateralized
loans because the recourse of the Fund to the borrower’s assets in the case of a default would be as a general unsecured creditor. The Fund applies the same investment and credit standards to unsecured loans
as to secured loans, except for collateral requirements.
46
Generally, the agent for a particular loan is responsible for monitoring collateral
and for exercising remedies available to the lenders such as foreclosure upon collateral in the event of the borrower’s default. In reliance upon the opinions of their legal counsel, agents generally are also responsible
for determining that the Lenders have obtained a perfected security interest in the collateral securing
loans, if any. However, the agent will usually only be liable for its gross negligence or willful misconduct,
and not for ordinary negligence. In certain circumstances, the loan agreement may authorize the agent to liquidate
the collateral and to distribute the liquidation proceeds pro rata among the lenders. Financial difficulties
of agents can also pose a risk to the Fund. If an agent for a particular loan becomes insolvent, the Fund could
incur losses in connection with its investment in that loan. An agent could declare bankruptcy, and a regulatory
authority could appoint a receiver or conservator. Should this occur, the assets that the agent holds under
the loan agreement, if any, should continue to be available to the lenders, including the Fund. A regulator or
a court, however, might determine that any such assets are subject to the claims of the agent’s general or secured creditors. If that occurs, the Fund might incur costs and delays in realizing final payment on a loan,
or the Fund might suffer a loss of principal or interest. The Fund may be subject to similar risks when it buys
a participation interest in a loan. Most participations purchased by the Fund are structured to be “true sales” of the underlying loan, in which case the loan should not be included in the bankruptcy estate of the participation
seller. However, a court might determine that the participation was not in fact a “true sale,” in which case the Fund would be a general unsecured creditor of the participation seller.
The Fund may also invest in loans that are not secured by collateral. Unsecured loans
involve additional risk because the lenders are general unsecured creditors of the borrower and any secured
creditors may have prior rights of recourse to the assets of the borrower, and the assets of the borrower
may be insufficient to satisfy in full all obligations owed to its creditors.
Borrower
Covenants and Lender Rights. Loan agreements historically
have had contractual terms designed to protect lenders, which often include restrictive covenants that limit the activities of the borrower.
A restrictive covenant is a promise by the borrower not to take certain actions that might impair the rights of lenders. Those covenants
typically require the scheduled payment of interest and principal and may include restrictions on dividend payments and other distributions
to the borrower’s shareholders, provisions requiring the borrower to maintain specific financial ratios or relationships and limits
on the borrower’s total debt. In addition, a covenant may require the borrower to prepay the loan or debt obligation with any excess
cash flow, proceeds of asset sales or casualty insurance, or other available cash. A breach of a covenant (after the expiration of any
cure period) in a loan agreement that is not waived by the agent and the lenders normally is an event of default, permitting acceleration
of the loan. This means that the agent has the right to demand immediate repayment in full of the outstanding loan. If a lender accelerates
the repayment of a loan because of the borrower’s violation of a restrictive covenant under the loan agreement, the borrower might
default in payment of the loan. If a loan is not paid when due, or if upon acceleration of a loan, the borrower fails to repay principal
and accrued (but unpaid) interest in full, this failure may result in a reduction in value of the loan (and possibly the Fund’s
net asset value).
Lenders historically have had certain voting and consent rights under a loan agreement.
Action subject to a lender vote or consent generally requires the vote or consent of the holders of
some specified percentage of the outstanding principal amount of a loan. Certain decisions, such as reducing the
amount or increasing the time for payment of interest on or repayment of principal of a loan, or releasing
collateral for the loan, frequently requires the unanimous vote or consent of all lenders affected.
If the Fund is not a direct lender under the loan because it has invested via a participation,
derivative or other indirect means, the Fund may not be entitled to exercise some or all of the
lender rights described in this section.
Over time, the customary terms of loans have evolved such that they are no longer
accompanied by the various restrictive covenants that historically accompanied most loans and that were
in favor of the investor. Newly originated loans (including reissuances and restructured loans) in which the
Fund may invest have
47
varied
terms and conditions, but generally contain few or no financial maintenance covenants (sometimes referred to as "covenant lite"). Financial maintenance
covenants are those that require a borrower to maintain certain financial metrics during the life of
the loan, such as maintaining certain levels of cash flow or limiting leverage. In the event of financial deterioration
on the part of the borrower, these covenants are included to permit the lenders to renegotiate the terms
of the loan, such as increasing the borrowing costs to the borrower, or to take other actions which would
improve the position of the lender. Accordingly, the Fund may experience difficulty or delays in enforcing
its rights on its holdings of loans, which may result in losses to the Fund, especially during a downturn
in the credit cycle. Although loans may contain few or no financial maintenance covenants, information
necessary to monitor a borrower’s financial performance may be available without covenants to lenders
and the public alike and can be used to detect such early warning signs as deterioration of a borrower’s
financial condition or results. When such information is available, the Adviser will seek to take appropriate
action without the help of covenants in the loans.
Limited
Secondary Market for Loans. Due to restrictions on transfers
in loan agreements and the nature of the private syndication of loans, some loans are not as easily purchased or sold as publicly-traded
securities. If there is no active secondary market for a loan, it may be more difficult to sell the interests in such a loan at a price
that is acceptable or to even obtain pricing information. Further, some loans, loan participations and assignments may not be rated by
major rating agencies. As a result, some loans are illiquid, which means that the Fund may be limited in its ability to sell those loans
at an acceptable price when it wants to in order to generate cash, avoid losses or to meet repurchase requests. The market for illiquid
financial assets is more volatile than the market for liquid securities and it may be more difficult to obtain accurate valuations for
the Fund’s investments.
Possible Limited Legal Recourse. Investments in loans, loan participations and assignments present the possibility that a Fund could be held liable as a co-lender under emerging legal theories of lender liability. In certain circumstances, loans may not be deemed to be securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have the protection of anti-fraud provisions of the federal securities laws, as would be the case for bonds or stocks. Instead, in such cases, lenders generally rely on the contractual provisions in the loan agreement itself, and common-law fraud protections under applicable state law.
Possible Limited Availability of Loans. Direct investments in loans and, to a lesser degree, investments in participation interests in or assignments of loans may be limited. The limited
availability may be due to a number of factors. Direct lenders may allocate only a small number of loans to new
investors, including the Fund. There may be fewer loans available for investment that meet the Fund’s credit standards, particularly in times of economic downturns. Also, lenders or agents may have an incentive to market
the less desirable loans to investors such as the Fund while retaining attractive loans for themselves.
This would reduce the amount of attractive investments for the Fund. If market demand for loans increases,
the interest paid by loans that the Fund holds may decrease.
Credit and Counterparty Risk Associated with Participation Interests. Participation interests are primarily dependent upon the creditworthiness of the borrower, which is obligated
to make payments of principal and interest on the loan. In buying a participation interest, however, the
Fund assumes both the credit risk of the borrower and the counterparty risk of the lender selling the participation
interest. As with an assignment or a loan originated by the Fund, there is a risk that a borrower may have
difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, the Fund’s income may be reduced and the value of the investment in the participation interest might also decline.
Further, the seller of the participation interest will have no obligation to the Fund other than to pay the
Fund the proportionate amount of the principal and interest payments it receives from the borrower. In addition,
if the seller of the participation interest fails to perform its obligations, purchasers might incur costs
and delays in realizing payment and suffer a loss of principal and/or interest, including in cases where the
borrower may have performed its obligation to the lender that issued the participation (e.g., if the
participation seller fails to pass along to the Fund payments received from the borrower). Although most participation
interests purchased by the Fund are structured to cause the Fund to become beneficial owner of the relevant
loans, and therefore avoid this outcome, if a lender that sells the Fund a participation interest becomes
insolvent, the Fund may be treated as a general creditor of the lender. As a general creditor, the Fund will
have to share the proceeds of the loan with any other creditors of the lender. The Fund will acquire a participation
interest only if the Adviser or Sub-Adviser determines that the lender (or other intermediary Participant)
selling the participation interest is creditworthy.
48
The Fund’s rights under a participation interest with respect to a particular loan may be more limited than the rights of original lenders or of investors who acquire an assignment of that loan.
The Fund has the right to receive payments of principal, interest and any fees to which it is entitled only
from the lender selling the participation interest and only when the lender receives the payments from the borrower.
In purchasing participation interests, the Fund will usually have a contractual relationship only
with the selling institution and not the underlying borrower. The Fund generally will have no right directly to enforce
compliance by the borrower with the terms of the related loan agreement, nor will the Fund necessarily
have the right to object to certain changes to the loan agreement agreed to by the selling institution. If the
Fund buys a participation interest in a loan, the Fund may be subject to any rights of set-off the borrower
has against the selling institution (although recourse to the selling institution may be available in the
event of any such set-off). In the event of bankruptcy or insolvency of the borrower, the obligation of the borrower
to repay the loan may be subject to certain defenses that can be asserted by the borrower as a result of any
improper conduct of the lender selling the participation (although recourse to the lender may be available).
As a result, the Fund may be subject to delays, expenses and risks that are greater than those that exist when
the Fund is an original lender or assignee, and therefore a participation may be relatively illiquid as compared
to a direct investment in a loan because of a smaller universe of investors who are willing to assume these
additional risks present in a participation.
Other Investments
Real Estate Investment Trusts (REITs). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interest therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States
or both. Equity REITs invest the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital gains by selling property
that has appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages
and derive income from the collection of interest payments.
Investments in REITs may be subject to many of the same risks as direct investments
in real estate. These risks include difficulties in valuing and trading real estate, declines in the
value of real estate, risks related to general and local economic conditions, adverse changes in the climate for
real estate, environmental liability risks, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values,
the appeal of properties to tenants, heavy cash flow dependency and increases in interest rates.
To the extent that the Fund invests in REITs, the Fund could conceivably acquire real estate directly as a result
of a default on the REIT interests or obligations it owns.
In addition to the risks of direct real estate investment described above, equity
REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage
REITs may be affected by the quality of any credit extended. REITs are also subject to the following
risks: they are dependent upon management skill and on cash flows; are not diversified; are subject
to defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption
from the 1940 Act; and are subject to interest rate risk. If the Fund invests in REITs , it will bear a proportionate
share of the expenses of the REITs.
Furthermore, for tax reasons, a REIT may impose limits on how much of its securities
any one investor may own. These ownership limitations (also called “excess share provisions”) may be based on ownership of securities by multiple funds and accounts managed by the same investment adviser and
typically result in adverse consequences (such as automatic divesture of voting and dividend rights for
shares that exceed the excess share provision) to investors who exceed the limit. A REIT’s excess share provision may result in the Fund being unable to purchase (or otherwise obtain economic exposure to) the desired
amounts of certain REITs. In some circumstances, the Fund may seek and obtain a waiver from a REIT to exceed the REIT’s ownership limitations without being subject to the adverse consequences of exceeding
such limit were a waiver not obtained, provided that the Fund complies with the provisions of the waiver.
49
Regulation S Securities. Regulation S securities of U.S. and non-U.S. issuers are offered through private offerings without registration with the SEC pursuant to Regulation S of the
1933 Act. Offerings of Regulation S securities may be conducted outside of the United States, and Regulation
S securities may be relatively less liquid as a result of legal or contractual restrictions on resale.
Although Regulation S securities may be resold in privately negotiated transactions, the price realized from these
sales could be less than the originally paid by a Fund. Further, companies whose securities are not publicly traded
may not be subject to the disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded. Accordingly, Regulation S securities may involve a high degree of
business and financial risk and may result in substantial losses.
Other Investment Companies. Unless otherwise indicated in this SAI or in a Fund’s prospectus, a Fund may purchase shares of other investment companies, including ETFs, non-exchange traded U.S. registered open-end investment companies (mutual funds), closed-end investment companies, or
non-U.S. investment companies traded on foreign exchanges. When a Fund purchases shares of another investment company, the Fund will indirectly bear its proportionate share of the advisory fees and other operating
expenses of such investment company and will be subject to the risks associated with the portfolio
investments of the underlying investment company.
A Fund’s investment in the securities of other investment companies is subject to the applicable provisions of the 1940 Act and the rules thereunder. Specifically, Section 12(d)(1)
of the 1940 Act contains various limitations on the ability of a registered investment company (an “acquiring fund”) to acquire shares of another registered investment company (an “acquired fund”). Under these limits, an acquiring fund generally cannot (i) purchase more than 3% of the total outstanding voting stock of an acquired
fund; (ii) invest more than 5% of its total assets in securities issued by an acquired company; and (iii)
invest more than 10% of its total assets in securities issued by other investment companies. Likewise, an acquired
fund, as well as its principal underwriter or any broker or dealer registered under the Exchange Act, cannot
knowingly sell more than 3% of the total outstanding voting stock of the acquired fund to an acquiring
fund, or more than 10% of the total outstanding voting stock of the acquired fund to acquiring funds generally.
Rule 12d1-4 under the 1940 Act allows a fund to acquire the securities of another investment company in excess of the limitations imposed by Section 12 without obtaining an exemptive order
from the SEC, subject to certain limitations and conditions. Among those conditions is the requirement that,
prior to a fund relying on Rule 12d1-4 to acquire securities of another fund in excess of the limits of Section
12(d)(1), the acquiring fund must enter into a Fund of Funds Agreement with the acquired fund. (This requirement
does not apply when the acquiring fund’s investment adviser acts as the acquired fund’s investment adviser and does not act as sub-adviser to either fund.)
Rule 12d1-4 also is designed to limit the use of complex fund structures. Under Rule
12d1-4, an acquired fund is prohibited from purchasing or otherwise acquiring the securities of another
investment company or private fund if, immediately after the purchase, the securities of investment companies
and private funds owned by the acquired fund have an aggregate value in excess of 10% of the value of the acquired fund’s total assets, subject to certain limited exceptions. Accordingly, to the extent a Fund’s shares are sold to other investment companies in reliance on Rule 12d1-4, the Fund will be limited in the amount
it could invest in other investment companies and private funds.
In addition to Rule 12d1-4, the 1940 Act and related rules provide other exemptions
from these restrictions. For example, these limitations do not apply to investments by a Fund in investment companies that are money market funds, including money market funds that have the Adviser or
an affiliate of the Adviser as an investment adviser.
Private Equity and Debt Investments. Privately issued securities, which include private investments in public equity (PIPEs), and private debt investments, involve an extraordinarily high
degree of business and financial risk and can result in substantial or complete losses. Some portfolio companies
in which the Fund may invest may be operating at a loss or with substantial variations in operating
results from period to period and may need substantial additional capital to support expansion or to achieve or
maintain competitive positions. Such companies may face intense competition, including competition from
companies with much
50
greater financial resources, much more extensive development, production, marketing
and service capabilities and a much larger number of qualified managerial and technical personnel. The Fund
can offer no assurance that the marketing efforts of any particular portfolio company will be successful
or that its business will succeed. Additionally, privately held companies are not subject to SEC reporting requirements
or the reporting requirements of publicly traded companies in applicable jurisdictions, are not required
to maintain their accounting records in accordance with generally accepted accounting principles, and
are not required to maintain effective internal controls over financial reporting. As a result, the Adviser
may not have timely or accurate information about the business, financial conditions and results of operations
of the privately held companies in which the Fund invests. The more limited financial information and lack
of publicly available prices require a Fund to determine a fair value for such investments in accordance
with the valuation policy approved by the Board and related procedures. Difficulty in valuing such investments
may make it difficult to accurately determine a Fund's exposure to privately issued securities. The Fund’s NAV could be adversely affected if the Fund’s determinations regarding the fair value of the Fund’s investments were materially higher than the values that the Fund ultimately realizes upon the disposal of such investments.
In addition, input from the Adviser’s investment professionals as part of the Fund’s valuation process could result in a conflict of interest as the Adviser’s management fee is based, in part, on the value of the Fund’s assets.
Investments in private companies may be considered to be illiquid and may be difficult
to sell at a desirable time or at the prices at which the Fund has valued the investments. Additional
risks include that the Fund could be subject to contingent liabilities in the event a private issuer is acquired
by another company during the period it is held by the Fund; and that the company may be using excessive
leverage. Privately issued debt securities can often be below investment grade quality and frequently
are unrated.
Defaulted Securities. Defaulted securities are debt securities on which the issuer is not currently making
interest payments. In order to enforce its rights in defaulted securities, a Fund
may be required to participate in legal proceedings or take possession of and manage assets securing the issuer’s obligations on the defaulted securities. This could increase operating expenses and adversely affect
net asset value. Risks of defaulted securities may be considerably higher as they are generally unsecured and
subordinated to other creditors of the issuer. Investments in defaulted securities generally will also be
considered illiquid investments subject to the limitations described herein, except as otherwise may be
determined under the Trust’s applicable policies and procedures.
Variable or Floating Rate Instruments. Variable or floating rate instruments are securities that provide for a periodic adjustment in the interest rate paid on the obligation. The interest
rates for securities with variable interest rates are readjusted on set dates (such as the last day of the month
or calendar quarter) and the interest rates for securities with floating rates are reset whenever a specified
interest rate change occurs. Variable or floating interest rates generally reduce changes in the market price of
securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly,
as market interest rates decrease or increase, the potential for capital appreciation or depreciation
is less for variable or floating rate securities than for fixed rate obligations. Many securities with variable
or floating interest rates have a demand feature allowing the Fund to demand payment of principal and accrued
interest prior to its maturity. The terms of such demand instruments require payment of principal and accrued
interest by the issuer, a guarantor, and/or a liquidity provider. All variable or floating rate instruments
will meet the applicable rating standards of the Fund. The Fund’s Adviser, or Sub-Adviser, as applicable, may determine that an unrated floating rate or variable rate demand obligation meets the Fund’s rating standards by reason of being backed by a letter of credit or guarantee issued by a bank that meets those rating
standards.
The secondary market for certain floating rate loans may be subject to irregular trading
activity, wide bid/ask spreads and extended trade settlement periods (in some cases, longer than
seven days). Certain floating rate loans held by the Fund might not be considered securities for purposes
of the Exchange Act and therefore a risk exists that purchasers, such as the Fund, may not be entitled to
rely on the antifraud provisions of those Acts.
Zero Coupon and Pay-in-Kind Securities. Zero coupon securities do not pay interest or principal until final maturity, unlike debt securities that traditionally provide periodic payments
of interest (referred to as a
51
coupon payment). Investors must wait until maturity to receive interest and principal,
which increases the interest rate and credit risks of a zero coupon security. Pay-in-kind securities are
securities that have interest payable by delivery of additional securities. Upon maturity, the holder is entitled
to receive the aggregate par value of the securities. Zero coupon and pay-in-kind securities may be subject to
greater fluctuation in value and lower liquidity in the event of adverse market conditions than comparably rated
securities paying cash interest at regular interest payment periods. Investors may purchase zero coupon and
pay-in-kind securities at a price below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents “original issue discount” on the security.
Premium Securities. The Fund may invest in premium securities. Premium securities are securities bearing coupon rates higher than the then prevailing market rates.
Premium securities are typically purchased at a “premium,” in other words, at a price greater than the principal amount payable on maturity. The Fund will not amortize the premium paid
for such securities in calculating its net investment income. As a result, in such cases the purchase of
premium securities provides the Fund a higher level of investment income distributable to shareholders on a current
basis than if the Fund purchased securities bearing current market rates of interest. However, the yield
on these securities would remain at the current market rate. If securities purchased by the Fund at a premium
are called or sold prior to maturity, the Fund will realize a loss to the extent the call or sale price is less
than the purchase price. Additionally, the Fund will realize a loss of principal if it holds such securities
to maturity.
Stripped Income Securities. The Fund may invest in stripped income securities. Stripped Income Securities are obligations representing an interest in all or a portion of the income
or principal components of an underlying or related security, a pool of securities, or other assets. Stripped
income securities may be partially stripped so that each class receives some interest and some principal. However,
they may be completely stripped, where one class will receive all of the interest (the interest-only
class or the IO class), while the other class will receive all of the principal (the principal-only class
or the PO class).
The market values of stripped income securities tend to be more volatile in response
to changes in interest rates than are conventional income securities. In the case of mortgage-backed
stripped income securities, the yields to maturity of IOs and POs may be very sensitive to principal
repayments (including prepayments) on the underlying mortgages resulting in the Fund being unable to recoup
its initial investment or resulting in a less than anticipated yield. The market for stripped income securities
may be limited, making it difficult for the Fund to dispose of its holdings at an acceptable price.
Participation Notes. Participation notes, also known as participation certificates, are issued by banks
or broker-dealers and are designed to replicate the performance of foreign companies
or foreign securities markets and can be used by the Fund as an alternative means to access the securities
market of a country. Participation notes are generally traded OTC. The performance results of participation
notes will not replicate exactly the performance of the foreign company or foreign securities market that they
seek to replicate due to transaction and other expenses. Investments in participation notes involve the same
risks associated with a direct investment in the underlying foreign companies or foreign securities market
that they seek to replicate. In addition, participation notes are subject to counterparty risk, currency risk and
reinvestment risk. Counterparty risk is the risk that the broker-dealer or bank that issues them will
not fulfill its contractual obligation to complete the transaction with the Fund. Participation notes constitute
general unsecured contractual obligations of the banks or broker-dealers that issue them, and the Fund
is relying on the creditworthiness of such banks or broker-dealers and has no rights under a participation
note against the issuer of the underlying assets. Additionally, there is a currency risk since the dollar value of the Fund’s foreign investments will be affected by changes in the exchange rates between the
dollar and (a) the currencies in which the notes are denominated, such as euro denominated participation
notes, and (b) the currency of the country in which the foreign company sits. Also, there is a reinvestment
risk because the amounts from the note may be reinvested in a less valuable investment when the note
matures.
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Investment Techniques
Forward Commitments, When-Issued and Delayed Delivery Securities. Securities purchased or sold on a forward commitment, when-issued or delayed delivery basis involve delivery and
payment that take place in the future after the trade date or the date of the commitment to purchase
or sell the securities at a pre-determined price and/or yield. Settlement of such transactions normally occurs
a month or more after the purchase or sale commitment is made. Typically, no interest accrues to the purchaser
until the security is delivered. Forward commitments include “to be announced” (TBA) transactions, which are contracts for the purchase and sale of mortgage-backed securities issued or guaranteed by certain U.S.
agencies or government sponsored enterprises for delivery at a future settlement date agreed upon
by the two parties to the transaction, which is typically a month or more after the trade date of the transaction.
On the trade date of a TBA transaction, the counterparties agree upon certain criteria for the securities
that are to be delivered, including the issuer, maturity, coupon, face value and price, but the precise securities
to be delivered are not specified. Instead, the actual securities to be delivered, which must satisfy the
specified criteria, are communicated by the seller to the buyer shortly before the agreed upon settlement
date. Although the Fund generally intends to acquire or dispose of securities on a forward commitment, when-issued
or delayed delivery basis, the Fund may instead sell these securities or its commitment before
the settlement date if deemed advisable. This will frequently be the case for TBA transactions and other
forward-settling mortgage-backed securities transactions. No specific limitation exists as to the percentage of the Fund’s assets which may be used to acquire securities on a when-issued and delayed delivery basis.
When purchasing a security on a forward commitment, when-issued or delayed delivery
basis, the Fund assumes the risks of ownership of the security, including the risk of price and yield
fluctuations, and takes such fluctuations into account when determining its net asset value. Securities purchased
on a forward commitment, when-issued or delayed delivery basis are subject to changes in value based upon the public’s perception of the creditworthiness of the issuer and changes, real or anticipated,
in the level of interest rates. Accordingly, securities acquired on such a basis may expose the Fund to risks because
they may experience such fluctuations prior to actual delivery. Purchasing securities on a forward commitment,
when-issued or delayed delivery basis may involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that obtained in the transaction itself.
Many forward commitments, when-issued and delayed delivery transactions, including
TBAs, are also subject to the risk that a counterparty may become bankrupt or otherwise fail to perform
its obligations due to financial difficulties, including making payments or fulfilling delivery obligations
to the Fund. The Fund may obtain no or only limited recovery in a bankruptcy or other reorganizational proceedings,
and any recovery may be significantly delayed. With respect to TBA transactions and other forward-settling
mortgage-backed securities transactions, the counterparty risk may be mitigated by the exchange of
variation margin between the counterparties on a regular basis as the market value of the deliverable security
fluctuates.
Investment in these types of securities may increase the possibility that the Fund
will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in
portfolio transactions in order to honor its commitment. In the case of a purchase transaction, the delayed delivery
securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded
as an asset of the Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed
delivery securities is a liability of the Fund until settlement. TBA transactions and other forward-settling
mortgage-backed securities transactions may be effected pursuant to a collateral agreement with the counterparty
under which the parties exchange collateral consisting of cash or liquid securities in an amount as specified
by the agreement that is based on the change in the market value of the TBA transactions governed by the agreement.
The Fund or the counterparty will make payments throughout the term of the transaction as collateral
values fluctuate to maintain full collateralization for the term of the transaction. Collateral will be
marked-to-market every business day. If the counterparty defaults on the transaction or declares bankruptcy
or insolvency, the Fund might incur expenses in enforcing its rights, or the Fund might experience delay and
costs in recovering collateral or may suffer a loss if the value of the collateral declines.
Short Sales. The Fund may engage in short sales.
53
A short sale involves the sale of a security which the Fund does not own in the hope
of purchasing the same security at a later date at a lower price. To make delivery to the buyer, the
Fund must borrow the security from a broker. The Fund normally closes a short sale by purchasing an equivalent
number of shares of the borrowed security on the open market and delivering them to the broker. A short
sale is typically effected when the Fund’s Adviser believes that the price of a particular security will decline. Open short positions using options, futures, swaps or forward foreign currency contracts are
not deemed to constitute selling securities short.
To secure its obligation to deliver the securities sold short to the broker and repay
the securities borrowed, the Fund will be required to deposit cash or liquid securities with the broker as
collateral. In addition, the Fund may have to pay a fee or rate of interest to borrow the securities, and while the
loan of the security sold short is outstanding, the Fund is required to pay to the broker the amount of any dividends
paid on shares sold short. The collateral pledged by the Fund to the broker in connection with short sales
will be marked to market daily. The collateral pledged does not have the effect of limiting the amount of money
that the Fund may lose on a short sale.
Short positions create a risk that the Fund will be required to cover them by buying
the security at a time when the security has appreciated in value, thus resulting in a loss to the Fund.
A short position in a security poses more risk than holding the same security long. Because a short position loses value as the security’s price increases, the loss on a short sale is theoretically unlimited. The loss on
a long position is limited to what the Fund originally paid for the security together with any transaction costs. The
Fund may not always be able to borrow a security the Fund seeks to sell short at a particular time or at an acceptable
price. It is possible that the market value of the securities the Fund holds in long positions will decline
at the same time that the market value of the securities the Fund has sold short increases, thereby increasing the Fund’s potential volatility and losses. Because the Fund may be required to pay dividends, interest,
premiums and other expenses in connection with a short sale, any benefit for the Fund resulting from
the short sale will be decreased, and the amount of any ultimate gain or loss will be decreased or increased,
respectively, by the amount of such expenses.
The Fund may enter into short sales against the box. Short sales against the box are
short sales of securities that the Fund owns or has the right to obtain (equivalent in kind or amount
to the securities sold short). If the Fund enters into a short sale against the box, it will be required
to set aside securities equivalent in kind and amount to the securities sold short (or securities convertible or exchangeable
into such securities) and will be required to hold such securities while the short sale is outstanding.
The Fund will incur transaction costs, including fees or interest expenses, in connection with opening, maintaining,
and closing short sales against the box.
Short sales against the box result in a “constructive sale” and require the Fund to recognize any taxable gain unless an exception to the constructive sale applies. See “Dividends, Distributions and Tax Matters — Tax Matters — Tax Treatment of Portfolio Transactions — Options, futures, forward contracts, swap agreements and hedging transactions.”
Margin Transactions. The Fund will not purchase any security on margin, except that the Fund may obtain such short-term credits as may be necessary for the clearance of purchases
and sales of portfolio securities. The payment by the Fund of initial or variation margin in connection with
futures, swaps or options transactions and the use of a reverse repurchase agreement to finance the purchase
of a security will not be considered the purchase of a security on margin.
Interfund Loans. The SEC has issued an exemptive order permitting the Invesco Funds to borrow money from and lend money to each other for temporary or emergency purposes. The Invesco Funds’ interfund lending program is subject to a number of conditions, including the requirements
that: (1) an interfund loan generally will occur only if the interest rate on the loan is more
favorable to the borrowing fund than the interest rate typically available from a bank for a comparable transaction
and the rate is more favorable to the lending fund than the rate available on overnight repurchase transactions;
(2) an Invesco Fund may not lend more than 15% of its net assets through the program (measured at
the time of the last loan); and (3) an Invesco Fund may not lend more than 5% of its net assets to another
Invesco Fund through
54
the program (measured at the time of the loan). The Fund may participate in the program
only if and to the extent that such participation is consistent with the Fund’s investment objective and investment policies. Interfund loans have a maximum duration of seven days. Loans may be called with one day’s notice and may be repaid on any day. At the current time, the Funds do not participate in interfund lending.
Borrowing. The Fund may borrow money to the extent permitted under the 1940 Act Laws, Interpretations and Exemptions (defined below) and Fund Policies. Such borrowings
may be utilized (i) for temporary or emergency purposes; (ii) in anticipation of or in response to adverse
market conditions; or, (iii) for cash management purposes. The prospectus may specify other reasons for which such
borrowings may be utilized. All borrowings are limited to an amount not exceeding 33 1/3% of the Fund’s total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings
that exceed this amount will be reduced within three business days to the extent necessary to comply
with the 33 1/3% limitation even if it is not advantageous to sell securities at that time.
If there are unusually heavy redemptions, the Fund may have to sell a portion of its
investment portfolio at a time when it may not be advantageous to do so. Selling Fund securities under these
circumstances may result in a lower net asset value per share or decreased dividend income, or both.
Invesco and the Sub-Advisers believe that, in the event of abnormally heavy redemption requests, the Fund’s borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio
securities less likely.
The ability of the Fund to borrow money to purchase additional securities, as described in the Fund's prospectus, if applicable, gives the Fund greater flexibility to purchase securities for investment or tax reasons and not to be dependent on cash flows. To the extent borrowing costs exceed the return
on the additional investments; the return realized by the Fund’s shareholders will be adversely affected. The Fund’s borrowing to purchase additional securities creates an opportunity for a greater total return
to the Fund, but, at the same time, increases exposure to losses. The Fund’s willingness to borrow money for investment purposes, and the amount it borrows depends upon many factors, including investment outlook, market
conditions and interest rates. Successful use of borrowed money to purchase additional investments depends on Invesco’s or the Sub-Adviser’s ability to predict correctly interest rates and market movements; such a strategy may not be successful during any period in which it is employed.
The Fund may borrow from a bank, broker-dealer, or another Invesco Fund. Additionally,
the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with
its custodian bank. To compensate the custodian bank for such overdrafts, the Fund may either (i) leave funds
as a compensating balance in their account so the custodian bank can be compensated by earning interest
on such funds; or (ii) compensate the custodian bank by paying it an agreed upon rate.
Repurchase Agreements. The Fund may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest. Repurchase agreements are
agreements under which the Fund purchases a security from a broker-dealer or bank that agrees to repurchase that
security at a mutually agreed upon time and price (which is higher than the purchase price), thereby resulting
in a yield to the Fund during the Fund’s holding period. The Fund may enter into a “continuing contract” or “open” repurchase agreement under which the seller is under a continuing obligation to repurchase the
underlying securities from the Fund on demand and the effective interest rate is negotiated on a daily basis.
Repurchase agreements may be viewed as loans made by the Fund which are collateralized by the securities
subject to repurchase.
In any repurchase agreement, the securities that are subject to the transaction may
be obligations issued by the U.S. government or its agencies or instrumentalities. The Fund may also engage
in repurchase agreements collateralized by non-government securities that are rated investment grade
or below investment grade by the requisite NRSROs or unrated securities of comparable quality, loan participations,
and equities.
If the seller of a repurchase agreement fails to repurchase the security in accordance
with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience
a loss on the sale of the security subject to the repurchase agreement to the extent that the sale proceeds
including accrued interest are less than the resale price provided in the repurchase agreement, including
interest. In addition, although the Bankruptcy Code and other insolvency laws may provide certain protections
for some types of
55
repurchase agreements, if the seller of a repurchase agreement should be involved
in bankruptcy or insolvency proceedings, the Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the value of the underlying security declines or
the Fund may be deemed to be an unsecured creditor and be required to return the securities to the seller.
The Fund may enter into repurchase agreements that involve securities that may be
subject to a court- ordered or other “stay” in the event of the seller’s bankruptcy or insolvency. A “stay” will prevent a Fund from selling the securities it holds under a repurchase agreement until permitted by a
court or other authority. In these situations a Fund may be subject to greater risk that the value of the securities
may decline before they are sold, and that a Fund may experience a loss.
The securities underlying a repurchase agreement will be marked-to-market every business
day, and if the value of the securities falls below a specified percentage of the repurchase price
(typically 102%), the counterparty will be required to deliver additional collateral to the Fund in the
form of cash or additional securities. Custody of the securities will be maintained by the Fund’s custodian or sub-custodian for the duration of the agreement.
The Fund may invest its cash balances in joint accounts with other Invesco Funds for
the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain
other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements
may be considered loans by the Fund under the 1940 Act.
Restricted and Illiquid Investments. The Fund may not acquire any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets
in illiquid investments.
For purposes of the above 15% limitation, an illiquid investment means any investment
that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven
calendar days or less without the sale or disposition significantly changing the market value of the investment,
as determined pursuant to the 1940 Act and applicable rules and regulations thereunder. Illiquid
investments may include a wide variety of investments, such as, for example: (1) repurchase agreements maturing
in more than seven days (unless the agreements have demand/redemption features); (2) OTC options contracts
and certain other derivatives (including certain swap agreements); (3) fixed time deposits that are
not subject to prepayment or that provide for withdrawal penalties upon prepayment (other than overnight deposits);
(4) loan interests and other direct debt instruments; (5) municipal lease obligations; (6) commercial paper
issued pursuant to Section 4(2) of the 1933 Act; and (7) securities that are unregistered, that can be
sold to qualified institutional buyers in accordance with Rule 144A under the 1933 Act, or that are exempt from registration
under the 1933 Act or otherwise restricted under the federal securities laws, including private placement
securities sold pursuant to Regulation S.
Limitations on the resale of restricted investments may have an adverse effect on
their marketability, which may prevent the Fund from disposing of them promptly at reasonable prices. The
Fund may have to bear the expense of registering such securities for resale, and the risk of substantial
delays in effecting such registrations. The Fund’s difficulty valuing and selling restricted securities or illiquid investments may result in a loss or be costly to the Fund.
If a substantial market develops for a restricted security or illiquid investment
held by the Fund, it may be treated as a liquid investment, in accordance with procedures and guidelines adopted
by the Board on behalf of the Fund.
Rule 144A Securities. Rule 144A securities are securities which, while initially privately placed, are
eligible for purchase and resale pursuant to Rule 144A under the 1933 Act. This Rule
permits certain qualified institutional buyers, such as the Fund, to trade in the securities even though such
securities are not registered under the 1933 Act. Pursuant to Rule 22e-4 under the 1940 Act, the Fund will consider
whether securities purchased under Rule 144A are illiquid and thus subject to the Fund’s restriction on illiquid investments. The determination of whether a Rule 144A security is liquid or illiquid will take into
account relevant market trading, and investment-specific considerations consistent with applicable SEC guidance. Additional
factors that may be considered include the (i) frequency of trades and quotes; (ii) number of dealers
and potential purchasers;
56
(iii) dealer undertakings to make a market; and (iv) nature of the security and of
market place trades (for example, the time needed to dispose of the security, the method of soliciting offers
and the mechanics of transfer). Investing in Rule 144A securities could increase the amount of the Fund’s illiquid investments if qualified institutional buyers are unwilling to purchase such securities.
Reverse Repurchase Agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by the Fund to financial institutions such as banks and broker-dealers,
with an agreement that the Fund will repurchase the securities at an agreed upon price and
date or upon demand. During the reverse repurchase agreement period, the Fund continues to receive interest
and principal payments on the securities sold, but pays interest to the other party on the proceeds
received. The Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as
to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable
market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements;
or (iii) to take advantage of market situations where the interest income to be earned from the investment of
the proceeds of the transaction is greater than the interest expense of the transaction.
Reverse repurchase agreements are a form of leverage and involve the risk that the
market value of securities to be repurchased by the Fund may decline below the price at which the
Fund is obligated to repurchase the securities, resulting in a requirement for the Fund to deliver margin
to the other party in the amount of the related shortfall, or that the other party may default on its obligation,
so that the Fund is delayed or prevented from completing the transaction. Leverage may make the Fund’s returns more volatile and increase the risk of loss. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities.
Mortgage Dollar Rolls. A dollar roll is a type of transaction that involves the sale by the Fund of a mortgage-backed security to a financial institution such as a bank or broker dealer,
with an agreement that the Fund will repurchase a substantially similar (i.e., same type, coupon and maturity)
security at an agreed upon price and date. The mortgage securities that are purchased will bear the same interest
rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment
histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest
or principal payments on the securities sold but is compensated for the difference between the current sales
price and the forward price for the future purchase. The Fund typically enters into a dollar roll transaction to enhance the Fund’s return either on an income or total return basis or to manage pre-payment risk.
Dollar roll transactions involve the risk that the market 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 repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files
for bankruptcy or becomes insolvent, the Fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to repurchase the securities.
Unless the benefits of the sale exceed the income, capital appreciation or gains on
the securities sold as part of the dollar roll, the investment performance of the Fund will be less than
what the performance would have been without the use of dollar rolls. The benefits of dollar rolls may depend upon the Adviser or Sub-Adviser’s ability to predict mortgage repayments and interest rates. There is no assurance
that dollar rolls can be successfully employed.
Standby Commitments. Under a standby commitment a bank or dealer would agree to purchase, at the Fund’s option, specified securities at a specified price. Standby commitments generally increase the cost of the acquisition of the underlying security, thereby reducing the yield. Standby commitments
depend upon the issuer’s ability to fulfill its obligation upon demand. Although no definitive creditworthiness criteria are used for this purpose, Invesco reviews the creditworthiness of the banks and other municipal
securities dealers from which the Funds obtain standby commitments in order to evaluate those risks.
57
Derivatives
The Fund may invest in derivatives. A derivative is a financial instrument whose value
is dependent upon the value of other assets, rates or indices, referred to as “underlying reference assets.” These underlying reference assets may include, among others commodities, stocks, bonds, interest rates,
currency exchange rates or related indices. Derivatives include, among others, swaps, options, futures
and forward foreign currency contracts. Some derivatives, such as futures and certain options, are traded
on U.S. commodity and securities exchanges, while other derivatives, such as many types of swap agreements,
are privately negotiated and entered into in the OTC market. In addition, the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) and implementing rules require
certain types of swaps to be traded on public execution facilities and centrally cleared.
Derivatives may be used for “hedging,” which means that they may be used when the portfolio managers seek to protect the Fund’s investments from a decline in value, which could result from changes in interest rates, market prices, currency fluctuations and other market factors. Derivatives
may also be used when the portfolio managers seek to increase liquidity, implement a tax or cash management
strategy, invest in a particular stock, bond or segment of the market in a more efficient or less expensive
way, modify the characteristics of the Fund’s portfolio investments, for example, duration, and/or to enhance return. However derivatives are used, their successful use is not assured and will depend upon, among
other factors, the portfolio managers’ ability to predict and understand relevant market movements.
Certain derivatives involve leverage, that is, the amount invested may be smaller
than the full economic exposure of the derivative instrument and the Fund could lose more than it invested.
The leverage involved in these derivative transactions may result in the Fund’s net asset value being more sensitive to changes in the value of its investments.
Commodity Exchange Act (CEA) Regulation and Exclusions:
With respect to the Fund, Invesco has claimed an exclusion from the definition of “commodity pool operator” (CPO) under the CEA and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition,
Invesco is relying upon a related exclusion from the definition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC with respect to the Fund.
The terms of the CPO exclusion require the Fund among other things, to adhere to certain
limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity options and swaps, which in turn include non-deliverable forwards, as further described below.
Because Invesco and the Fund intend to comply with the terms of the CPO exclusion, the Fund may, in the future,
need to adjust its investment strategies, consistent with its investment objective, to limit its investments
in these types of instruments. The Fund is not intended as a vehicle for trading in the commodity futures,
commodity options or swaps markets. The CFTC has neither reviewed nor approved Invesco’s reliance on these exclusions, or the Fund, its investment strategies, its prospectus or this SAI.
Generally, the exclusion from CPO regulation on which Invesco relies requires the
Fund to meet one of the following tests for its commodity interest positions, other than positions entered
into for bona fide hedging purposes (as defined in the rules of the CFTC): either (1) the aggregate initial margin
and premiums required to establish the Fund’s positions in commodity interests may not exceed 5% of the liquidation value of the Fund’s portfolio (after taking into account unrealized profits and unrealized losses on any such positions); or (2) the aggregate net notional value of the Fund’s commodity interest positions, determined at the time the most recent such position was established, may not exceed 100% of the liquidation value of the Fund’s portfolio (after taking into account unrealized profits and unrealized losses on any
such positions). In addition to meeting one of these trading limitations, this Fund may not market itself as a
commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or swaps markets.
If, in the future, the Fund can no longer satisfy these requirements, Invesco would withdraw its notice claiming
an exclusion from the definition of a CPO, and Invesco would be subject to registration and regulation
as a CPO with respect to the Fund, in accordance with the CFTC rules that allow for substituted compliance
with CFTC disclosure and
58
shareholder reporting requirements based on Invesco’s compliance with comparable SEC requirements. However, as a result of CFTC regulation with respect to the Fund, the Fund may incur
additional compliance and other expenses.
General risks associated with derivatives:
The use by the Fund of derivatives may involve certain risks, as described below.
Counterparty Risk: The risk that a counterparty under a derivatives agreement will not live up to its
obligations, including because of the counterparty’s bankruptcy or insolvency. Certain agreements may not contemplate delivery of collateral to support fully a counterparty’s contractual obligation; therefore, the Fund might need to rely solely on contractual remedies to satisfy the counterparty’s full obligation. As with any contractual remedy, there is no guarantee that the Fund will be successful in pursuing
such remedies, particularly in the event of the counterparty’s bankruptcy or insolvency. Many derivative trading agreements, such as an ISDA Master Agreement governing OTC swaps, provide for netting of derivatives
transactions governed by the agreement in the event of a default by either counterparty, pursuant to which the Fund’s and the counterparty’s obligations under the relevant transactions can be netted and set-off against each other, in which case the Fund’s obligation or right will be the net amount owed to or by the counterparty. Netting agreements are intended to function as a counterparty credit risk mitigant, but in
the case of a bankruptcy or insolvency of the relevant counterparty, are subject to the risk that the insolvency
regime applicable to the counterparty might not recognize the enforceability of the contractual netting provisions.
The Fund will not enter into a derivative transaction with any counterparty that Invesco and/or the
Sub-Advisers believe does not have the financial resources to honor its obligations under the transaction. Invesco
monitors the financial stability of counterparties. Where the obligations of the counterparty are guaranteed,
Invesco monitors the financial stability of the guarantor and the counterparty. If a counterparty’s creditworthiness declines, the value of the derivative would also likely decline, potentially resulting in losses to the
Fund.
The Fund will not enter into a transaction with any single counterparty if the net
amount owed or to be received under existing transactions under the agreements with that counterparty would
exceed 5% of the Fund’s net assets determined on the date the transaction is entered into or as otherwise permitted by law.
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. Leverage may cause the Fund to
be more volatile because it may exaggerate the effect of any increase or decrease in the value of the Fund’s portfolio securities. The use of some derivatives may result in economic leverage, which does
not result in the possibility of the Fund incurring obligations beyond its initial investment, but that
nonetheless permits the Fund to gain exposure that is greater than would be the case in an unlevered instrument.
Liquidity Risk: The risk that a particular derivative is difficult to sell or liquidate. If a derivative
transaction is particularly large or if the relevant market is illiquid, it may not be possible to
initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses
to the Fund.
Pricing Risk: The risk that the value of a particular derivative does not move in tandem or as
otherwise expected relative to the corresponding underlying instruments.
Special Regulatory Risks of Derivatives: The regulation of derivatives is a rapidly changing area of law and is subject to modification by government and judicial action. In addition, the
SEC, CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency,
including, for example, the implementation or reduction of speculative position limits, the implementation
of higher margin requirements, the establishment of daily price limits and the suspension of trading.
It is not possible to predict fully the effects of current or future regulation. However,
it is possible that developments in government regulation of various types of derivative instruments,
such as speculative position limits on certain types of derivatives, or limits or restrictions on the
counterparties with which the Fund engages in derivative transactions, may limit or prevent the Fund from using or limit the Fund’s use of these instruments effectively as a part of its investment strategy, and could adversely affect the Fund’s ability to
59
achieve its investment objective. Invesco will continue to monitor developments in
the area, particularly to the extent regulatory changes affect the Fund’s ability to enter into desired swap agreements. New requirements, even if not directly applicable to the Fund, may increase the cost of the Fund’s investments and cost of doing business.
Tax Risks: For a discussion of the tax considerations relating to derivative transactions, see “Dividends, Distributions and Tax Matters—Tax Matters—Tax Treatment of Portfolio Transactions.”
General risks of hedging strategies using derivatives:
The use by the Fund of hedging strategies involves special considerations and risks,
as described below.
Successful use of hedging transactions depends upon Invesco’s and the Sub-Advisers’ ability to predict correctly the direction of changes in the value of the applicable markets and securities,
contracts and/or currencies. While Invesco and the Sub-Advisers are experienced in the use of derivatives
for hedging, there can be no assurance that any particular hedging strategy will succeed.
In a hedging transaction, there might be imperfect correlation, or even no correlation,
between the price movements of an instrument used for hedging and the price movements of the investments
being hedged. Such a lack of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures
on the markets in which the hedging instrument is traded.
Hedging strategies, if successful, can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging
strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. Investors should bear in mind that the Fund is not obligated to actively
engage in hedging. For example, the Fund may not have attempted to hedge its exposure to a particular foreign
currency at a time when doing so might have avoided a loss.
Types of derivatives:
Swaps. The Fund may engage in certain strategies involving swaps to attempt to manage the
risk of its investments or, in certain circumstances, for investment purposes (e.g., as a substitute
for investing in securities), to speculate on future volatility levels or to decrease the volatility
exposure of other investments held by the Fund. Generally, swap agreements are contracts between the Fund and another
party (the counterparty) involving the exchange of payments on specified terms over periods ranging
from a few days to multiple years. A swap agreement may be negotiated bilaterally and traded OTC between
the two parties (for an uncleared swap) or, in some instances, must be transacted through a futures commission
merchant (FCM) and cleared through a clearinghouse that serves as a central counterparty (for a cleared
swap). In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or
differentials in returns) and/or cash flows earned or realized on a particular asset such as an equity or debt
security, commodity, currency, interest rate or index, calculated with respect to a “notional amount.” The notional amount is the set amount selected by the parties to use as the basis on which to calculate the obligations
that the parties to a swap agreement have agreed to exchange. The parties typically do not exchange the
notional amount. Instead, they agree to exchange the returns that would be earned or realized if the
notional amount were invested in given investments or at given interest rates. Examples of returns that
may be exchanged in a swap agreement are those of a particular security, a particular fixed or variable
interest rate, a particular foreign currency, or a “basket” of securities representing a particular index. Swap agreements can also be based on credit and other events. In some cases, such as cross currency swaps, the
swap agreement may require delivery (exchange) of the entire notional value of one designated currency
for another designated currency.
A Fund will typically only enter into swap agreements with counterparties who use
standard International Swap and Dealers Association, Inc. (“ISDA”) contract documentation. ISDA establishes industry standards for the documentation of swap agreements. Virtually all principal swap participants use
ISDA documentation because it has an established set of definitions, contract terms and counterparty
obligations, including
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provisions for master netting agreements. It is possible that developments in the
swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally,
ISDA master agreements include credit related contingent features which allow Counterparties to
OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements,
which would cause the Fund to accelerate payment of any net liability owed to the counterparty.
Comprehensive swaps regulation. The Dodd-Frank Act and analogous international laws enacted after the financial crisis imposed comprehensive regulatory requirements on swaps and swap
market participants. The U.S. regulatory framework includes: (1) registration and regulation of swap dealers
and major swap participants; (2) requiring central clearing and electronic execution of standardized
swaps on swap execution facilities; (3) imposing margin requirements on uncleared swap transactions; (4) regulating
and monitoring swap transactions through position limits and large trader reporting requirements;
and (5) imposing record keeping and centralized and public reporting requirements, on an anonymous basis,
for most swaps. The CFTC is responsible for the regulation of most swaps. The SEC has jurisdiction over
a small segment of the market referred to as “security-based swaps,” which includes swaps on single securities or narrow-based indices of securities and single name credit default swaps.
Uncleared swaps. In an uncleared swap, the swap counterparty is typically a brokerage firm, bank or
other financial institution. In the event that one party to the swap transaction defaults
and the transaction is terminated prior to its scheduled termination date, one of the parties may be required
to make an early termination payment to the other. An early termination payment may be payable by either
the defaulting party or the non-defaulting party, under certain circumstances, depending upon which of them is “in-the-money” with respect to the swap at the time of its termination. Early termination payments
may be calculated in various ways, but generally represent the amount that the “in-the-money” party would have to pay to replace the swap as of the date of its termination.
During the term of an uncleared swap, the Fund will be required to pledge to the swap
counterparty, from time to time, an amount of cash and/or other assets equal to the total net amount
(if any) that would be payable by the Fund to the counterparty if all outstanding swaps between the parties
were terminated on the date in question, including any early termination payments (variation margin). Periodically,
changes in the amount pledged are made to recognize changes in value of the swap contract resulting
from, among other things market value changes in the underlying investment referenced in the swap. Likewise,
the counterparty will be required to pledge cash or other assets to cover its obligations to the Fund.
However, the amount pledged will not always be equal to or more than the amount due to the other party.
Therefore, if a counterparty defaults in its obligations to the Fund, the amount pledged by the counterparty
and available to the Fund may not be sufficient to cover all the amounts due to the Fund and the Fund
may sustain a loss.
Regulations requiring initial margin to be posted by certain market participants for
uncleared swaps have been adopted and are being phased in over time. When these rules take effect with
respect to the Fund, if a Fund is deemed to have material swaps exposure (generally, an average gross notional
amount of uncleared swaps and foreign currency forward contracts at certain measurement dates exceeding
$8 billion), it will under these regulations be required to post initial margin in addition to variation margin.
Uncleared swaps are not traded on exchanges. As a result, swap participants may not
be as protected as participants on organized exchanges. Performance of a swap agreement is the responsibility
only of the swap counterparty and not of any exchange or clearinghouse. As a result, a Fund is subject
to the risk that a counterparty will be unable or will refuse to perform under such agreement, including
because of the counterparty’s bankruptcy or insolvency. The Fund risks the loss of the accrued but unpaid amounts under a swap agreement, which could be substantial, in the event of a default, insolvency
or bankruptcy by a swap counterparty. In such an event, the Fund will have contractual remedies pursuant to
the swap agreement, but bankruptcy and insolvency laws could affect the Fund’s rights as a creditor. If the counterparty’s creditworthiness declines, the value of a swap agreement would likely decline, potentially
resulting in losses.
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Cleared Swaps. Certain standardized swaps are subject to mandatory central clearing and trading
on execution facilities. The Dodd-Frank Act and analogous international laws will ultimately
require the clearing and trading on execution facilities of many swaps. To date, the CFTC has designated
only certain of the most common credit default index swaps and certain interest rate swaps as subject to mandatory
clearing and certain public execution facilities have made these swaps available to trade, but
it is expected that additional categories of swaps will in the future be designated as subject to mandatory clearing
and trade execution requirements.
In a cleared swap, the Fund’s ultimate counterparty is a central clearinghouse rather than a brokerage firm, bank or other financial institution. Cleared swaps are submitted for clearing through each party’s FCM, which must be a member of the clearinghouse that serves as the central counterparty.
When the Fund enters into a cleared swap, it must deliver to the clearinghouse (via
the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the clearinghouse, and are typically calculated as an amount based on the volatility in market value of the cleared
swap over a fixed period, but an FCM may require additional initial margin above the amount required
by the clearinghouse. During the term of the swap agreement, “variation margin” may also be required to be paid by the Fund or may be received by the Fund. If the value of the Fund’s cleared swap declines, the Fund will be required to make additional variation margin payments to the FCM to settle the change in value.
Conversely, if the market value of the Fund’s position increases, the FCM will post additional variation margin to the Fund’s account. At the conclusion of the term of the swap agreement, if the Fund has a loss equal to
or greater than the margin amount, the margin amount is paid to the FCM along with any loss in excess of the
margin amount. If the Fund has a loss of less than the margin amount, the excess margin is returned to the
Fund. If the Fund has a gain, the full margin amount and the amount of the gain are paid to the Fund.
Central clearing is designed to reduce counterparty credit risk and increase liquidity
compared to uncleared swaps because central clearing interposes the central clearinghouse as the
counterparty to each participant’s swap, but it does not eliminate those risks completely. There is also a risk of loss by the Fund of the initial and variation margin deposits in the event of bankruptcy or insolvency
of the FCM through which the Fund holds an open position, or the clearinghouse in a swap contract. The assets of
the Fund may not be fully protected in the event of the bankruptcy or insolvency of the FCM or clearinghouse
because the Fund might be limited to recovering only a pro rata share of all available funds and margin segregated
on behalf of an FCM’s customers. If the FCM does not provide accurate reporting, the Fund is also subject to the risk that the FCM could use the Fund’s assets to satisfy its own financial obligations or the payment obligations of another customer to the clearinghouse. Credit risk of cleared swap participants is concentrated
in a few clearinghouses, and the consequences of insolvency of a clearinghouse are not clear.
With cleared swaps, the Fund may not be able to obtain terms as favorable as it would
be able to negotiate for a bilateral, uncleared swap. In addition, an FCM may unilaterally amend
the terms of its agreement with the Fund, which may include the imposition of position limits or additional
margin requirements with respect to the Fund’s investment in certain types of swaps. Clearinghouses and FCMs can require termination of existing cleared swap transactions upon the occurrence of certain
events, and can also require increases in margin above the margin that is required at the initiation of
the swap agreement.
Finally, the Fund is subject to the risk that, after entering into a cleared swap
with an executing broker, no FCM or clearinghouse is willing or able to clear the transaction. In such an event,
the Fund may be required to break the trade and make an early termination payment to the executing broker.
Commonly used swap agreements include:
Credit Default Swaps (CDS): A CDS is an agreement between two parties where the first party agrees to make one or more payments to the second party, while the second party assumes the
risk of certain defaults, generally a failure to pay or bankruptcy of the issuer on a referenced debt obligation.
CDS transactions are typically individually negotiated and structured. The Fund may enter into CDS to create
long or short exposure to domestic or foreign corporate debt securities or sovereign debt securities.
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The Fund may buy a CDS (buy credit protection). In this transaction the Fund makes
a stream of payments based on a fixed interest rate (the premium) over the life of the swap in
exchange for a counterparty (the seller) taking on the risk of default of a referenced debt obligation
(the Reference Obligation). If a credit event occurs for the Reference Obligation, the Fund would
cease making premium payments and it would deliver defaulted bonds to the seller. In return, the seller
would pay the notional value of the Reference Obligation to the Fund. Alternatively, the two counterparties may
agree to cash settlement in which the seller delivers to the Fund (buyer) the difference between the market value
and the notional value of the Reference Obligation. If no event of default occurs, the Fund pays the fixed premium
to the seller for the life of the contract, and no other exchange occurs.
Alternatively, the Fund may sell a CDS (sell credit protection). In this transaction
the Fund will receive premium payments from the buyer in exchange for taking the risk of default of the
Reference Obligation. If a credit event occurs for the Reference Obligation, the buyer would cease to make premium
payments to the Fund and deliver the Reference Obligation to the Fund. In return, the Fund would pay
the notional value of the Reference Obligation to the buyer. Alternatively, the two counterparties may agree
to cash settlement in which the Fund would pay the buyer the difference between the market value and the notional
value of the Reference Obligation. If no event of default occurs, the Fund receives the premium
payments over the life of the contract, and no other exchange occurs.
Credit Default Index Swaps (CDX): A CDX is a swap on an index of CDS. A CDX allows an investor to manage credit risk or to take a position on a basket of credit entities (such as CDS
or CMBS) in a more efficient manner than transacting in single name CDS. If a credit event occurs in
one of the underlying companies, the protection is paid out via the delivery of the defaulted bond by the
buyer of protection in return for payment of the notional value of the defaulted bond by the seller of protection
or it may be settled through a cash settlement between the two parties. The underlying company is then removed
from the index. New series of CDX are issued on a regular basis. A Commercial Mortgage-Backed Index (CMBX)
is a type of CDX made up of 25 tranches of commercial mortgage-backed securities (See “Debt Instruments — Mortgage-Backed and Asset-Backed Securities”) rather than CDS. Unlike other CDX contracts where credit events are intended to capture an event of default, CMBX involves a pay-as-you-go (PAUG) settlement
process designed to capture non-default events that affect the cash flow of the reference obligation.
PAUG involves ongoing, two-way payments over the life of a contract between the buyer and the seller of protection
and is designed to closely mirror the cash flow of a portfolio of cash commercial mortgage-backed securities.
A CDX index tranche provides access to customized risk, exposing each investor to losses at different
levels of subordination. The lowest part of the capital structure is called the “equity tranche” as it has exposure to the first losses experienced in the basket. The mezzanine and senior tranches are higher
in the capital structure but can also be exposed to loss in value. Investments are subject to liquidity risks
as well as other risks associated with investments in credit default swaps.
Foreign Exchange Swaps: A foreign exchange swap involves an agreement between two parties to exchange two different currencies on a specific date at a fixed rate, and an agreement
for the reverse exchange of those two currencies at a later date and at a fixed rate. Foreign exchange
swaps were exempted from the definition of “swaps” by the U.S. Treasury and are therefore not subject to many rules under the CEA that apply to swaps, including the mandatory clearing requirement. They are also not considered “commodity interests” for purposes of CEA Regulations and Exclusions, discussed above. However, foreign exchange swaps nevertheless remain subject to the CFTC’s trade reporting requirements, enhanced anti-evasion authority, and strengthened business conduct standards.
Currency Swaps: A currency swap is an agreement between two parties to exchange periodic cash flows
on a notional amount of two or more currencies based on the relative value differential
between them. Currency swaps typically involve the delivery of the entire notional values of the
two designated currencies. In such a situation, the full notional value of a currency swap is subject to the risk
that the other party to the swap will default on its contractual delivery obligations. The Fund may also enter
into currency swaps on a net basis, which means the two different currency payment streams under the swap agreement
are converted and netted out to a single cash payment in just one of the currencies.
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Because currency control is of great importance to the issuing governments and influences
economic planning and policy, purchases and sales of currency and related instruments can be
negatively affected by government exchange controls, blockages, and manipulations or exchange restrictions
imposed by governments. These actions could result in losses to the Fund if it is unable to deliver
or receive a specified currency or funds in settlement of obligations, including swap transaction obligations.
These actions could also have an adverse effect on the Fund’s swap transactions or cause the Fund’s hedging positions to be rendered useless, resulting in full currency exposure as well as incurring unnecessary
transaction costs.
Interest Rate Swaps: An agreement between two parties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified principal or notional
amount. In other words, Party A agrees to pay Party B a fixed interest rate multiplied by a notional
amount and in return Party B agrees to pay Party A a variable interest rate multiplied by the same notional amount.
Commodity Swaps: A commodity swap agreement is a contract in which one party agrees to make periodic payments to another party based on the change in market value of a commodity-based
underlying instrument (such as a specific commodity or commodity index) in return for periodic
payments based on a fixed or variable interest rate or the total return from another commodity-based underlying
instrument. In a total return commodity swap, the Fund receives the price appreciation of a commodity
index, a portion of a commodity index or a single commodity in exchange for paying an agreed-upon fee.
Total Return Swaps: An agreement in which one party makes payments based on a set rate, either fixed
or variable, while the other party makes payments based on the return of an underlying
asset, which includes both the income it generates and any capital gains.
Volatility and Variance Swaps: A volatility swap involves an exchange between the Fund and a counterparty of periodic payments based on the measured volatility of an underlying
security, currency, commodity, interest rate, index or other reference asset over a specified time frame.
Depending on the structure of the swap, either the Fund’s or the counterparty’s payment obligation will typically be based on the realized volatility of the reference asset as measured by changes in its price or
level over a specified time period while the other party’s payment obligation will be based on a specified rate representing expected volatility for the reference asset at the time the swap is executed, or the measured
volatility of a different reference asset over a specified time period. The Fund will typically make or lose
money on a volatility swap depending on the magnitude of the reference asset’s volatility, or size of the movements in its price, over a specified time period, rather than general increases or decreases in the price of
the reference asset. Volatility swaps are often used to speculate on future volatility levels, to trade the spread
between realized and expected volatility, or to decrease the volatility exposure of other investments held
by the Fund. Variance swaps are similar to volatility swaps except payments are based on the difference
between the implied and measured volatility mathematically squared.
Inflation Swaps: Inflation swap agreements are contracts in which one party agrees to pay the cumulative
percentage increase in a price index, such as the Consumer Price Index, over the term
of the swap (with some lag on the referenced inflation index), and the other party pays a compounded
fixed rate. Inflation swap agreements may be used to protect the net asset value of the Fund against an unexpected
change in the rate of inflation measured by an inflation index. The value of inflation swap agreements
is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship
between nominal interest rates and the rate of inflation.
Swaptions: An option on a swap agreement, also called 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. A payer swaption gives the owner the right to pay 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.
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Swaptions are considered to be swaps for purposes of CFTC regulation. Although they
are currently traded OTC, the CFTC may in the future designate certain options on swaps as subject
to mandatory clearing and exchange trading.
Bundled Securities. Bundled Securities are typically represented by certificates and the Funds will be
permitted at any time to exchange such certificates for the underlying securities
evidenced by such certificates and thus the certificates are generally subject to the same risks as the underlying
securities held in the trust. The Fund will examine the characteristics of the underlying securities for compliance
with investment criteria but will determine liquidity with reference to the certificates itself. TRAINS and
other trust certificates are generally not registered under the 1933 Act or the 1940 Act and therefore must be
held by qualified purchasers and resold to qualified institutional buyers pursuant to Rule 144A under
the 1933 Act. Investments in certain TRAINS or other trust certificates may have the effect of increasing the
level of Fund illiquidity to the extent the Fund, at a particular point in time, may be unable to find qualified institutional
buyers interested in purchasing such securities.
Options. The Fund may invest in options. An option is a contract that gives the purchaser
of the option, in return for the premium paid, the right, but not the obligation, to buy from (in
the case of a call) or sell to (in the case of a put) the writer of the option at the exercise price during the term
of the option (for American style options) or on a specified date (for European style options), the security, currency
or other instrument underlying the option (or delivery of a cash settlement price, in the case of certain
options, such as an index option and other cash-settled options). An option on a CDS or a futures contract (described
below) gives the purchaser the right, but not the obligation, to enter into a CDS or assume a position
in a futures contract. Option transactions present the possibility of large amounts of exposure (or leverage),
which may result in the Fund’s net asset value being more sensitive to changes in the value of the option.
The value of an option position will reflect, among other things, the current market
value of the underlying investment, the time remaining until expiration, the relationship of the exercise
price to the market price of the underlying investment, the price volatility of the underlying investment and general
market and interest rate conditions.
The Fund will not write (sell) options if, immediately after such sale, the aggregate
value of securities or obligations underlying the outstanding options would exceed 20% of the Fund’s total assets. The Fund will not purchase options if, immediately after such purchase, the aggregate premiums paid
for outstanding options would exceed 5% of the Fund’s total assets.
The Fund may effectively terminate its right or obligation under an option by entering
into an offsetting closing transaction. For example, the Fund may terminate its obligation under a call
or put option that it had written by purchasing an identical call or put option, which is known as a closing
purchase transaction. Conversely, the Fund may terminate a position in a put or call option it had purchased
by writing an identical put or call option, which is known as a closing sale transaction. Closing transactions
permit the Fund to realize profits or limit losses on an option position prior to its exercise or expiration.
Options may be either listed on an exchange or traded in OTC markets. Listed options
are tri-party contracts (i.e., performance of the obligations of the purchaser and seller are guaranteed
by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration dates and differ from exchange-traded
options in that OTC options are transacted with dealers directly and not through a clearing corporation
(which guarantees performance). In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time; therefore the Fund may be required
to treat some or all OTC options as illiquid investments. Although the Fund will enter into OTC options only
with dealers that are expected to be capable of entering into closing transactions with it, there is no
assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to exercise
or expiration. In the event of insolvency of the dealer, the Fund might be unable to close out an OTC option
position at any time prior to its expiration.
Types of Options:
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Put Options on Securities. A put option gives the purchaser the right to sell, to the writer, the underlying
security, contract or foreign currency at the stated exercise price at any time prior
to the expiration date of the option (for American style options) or on a specified date (for European style options),
regardless of the market price or exchange rate of the security, contract or foreign currency, as the
case may be, at the time of exercise. If the purchaser exercises the put option, the writer of a put option is
obligated to buy the underlying security, contract or foreign currency for the exercise price.
Call Options on Securities. A call option gives the purchaser the right to buy, from the writer, the underlying security, contract or foreign currency at the stated exercise price at
any time prior to the expiration of the option (for American style options) or on a specified date (for European style
options), regardless of the market price or exchange rate of the security, contract or foreign currency, as the
case may be, at the time of exercise. If the purchaser exercises the call option, the writer of a call option
is obligated to sell to and deliver the underlying security, contract or foreign currency to the purchaser of the call
option for the exercise price.
Index Options. Index options (or options on securities indices) give the option buyer the right
to receive, upon exercise, a cash settlement amount instead of the securities included in the
relevant index, if the closing level of the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal
to the difference between the closing price of the index on the relevant option expiration date and the exercise
price of the call or put times a specified multiple (the multiplier), which determines the total dollar value
for each point of such difference.
The risks of investment in index options may be greater than options on securities,
especially if the Fund writes index call options. Because index options are settled in cash, when the Fund
writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring
and holding the underlying securities. The Fund can offset some of the risk of writing an index call option by
holding a diversified portfolio of securities similar to those included in the underlying index. However, the Fund
cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities in the index and,
as a result, bears the risk that the value of the securities held will not be perfectly correlated with the value
of the index.
CDS Options. A CDS option transaction gives the buyer the right, but not the obligation, to enter
into a CDS at a specified future date and under specified terms in exchange for paying a
market based purchase price or premium. The writer of the option bears the risk of any unfavorable move
in the value of the CDS relative to the market value on the exercise date, while the purchaser may allow the
option to expire unexercised.
Options on Futures Contracts. Options on futures contracts give the holder the right to assume a position in a futures contract (to buy the futures contract if the option is a call and to
sell the futures contract if the option is a put) at a specified exercise price at any time during the period of the
option.
Option Techniques:
Writing Options. The Fund may write options to generate additional income. As the writer of an option,
the Fund may have no control over when the underlying reference asset must be sold (in
the case of a call option) or purchased (in the case of a put option), if the option was structured as
an American style option, because the option purchaser may notify the Fund of exercise at any time prior to
the expiration of the option. In addition, if the option is cash-settled instead of deliverable, the Fund is obligated
to pay the option purchaser the difference between the exercise price and the value of the underlying
reference asset, instead of selling or purchasing the underlying reference asset, if the option is exercised.
In general, options are rarely exercised prior to expiration. Whether or not an option expires unexercised, the writer
retains the amount of the premium.
The Fund would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the price it is willing to pay for the underlying reference asset.
In return for the premium received for writing a put option, the Fund assumes the risk that the price of the
underlying reference asset will decline below the exercise price, in which case the put option may be exercised
and the Fund may suffer a loss.
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In return for the premium received for writing a call option on a reference asset,
the Fund foregoes the opportunity for profit from a price increase in the underlying reference asset above
the exercise price so long as the option remains open, but retains the risk of loss should the price of the reference
asset decline.
If an option that the Fund has written expires, the Fund will realize a gain in the
amount of the premium; however, such gain may be offset by a decline in the market value of the underlying
reference asset, held by the Fund during the option period. If a call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying reference asset, which will be increased or offset by the premium
received. The obligation imposed upon the writer of an option is terminated upon the expiration
of the option, or such earlier time at which the Fund effects a closing purchase transaction by purchasing an option
(put or call as the case may be) identical to that previously sold. However, once a Fund has received an exercise
notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the
option and must deliver (for a call) or purchase (for a put) the underlying reference asset at the exercise price
(if deliverable) or pay the difference between the exercise price and the value of the underlying reference asset
(if cash-settled).
Purchasing Options. The Fund may purchase a put option on an underlying reference asset owned by the
Fund in order to protect against an anticipated decline in the value of the underlying
reference asset held by the Fund; may purchase put options on underlying reference assets against which it
has written other put options; or may speculate on the value of an underlying reference asset, index or
quantitative measure. The premium paid for the put option and any transaction costs would reduce any profit
realized when the underlying reference asset is delivered upon the exercise of the put option. Conversely,
if the underlying reference asset does not decline in value, the option may expire worthless and the
premium paid for the protective put would be lost. A put option may also be purchased on an investment
the Fund does not own.
The Fund may purchase a call option for the purpose of acquiring the underlying reference
asset for its portfolio, or on underlying reference assets against which it has written other call
options. The Fund is not required to own the underlying reference asset in order to purchase a call option.
If the Fund does not own the underlying position, the purchase of a call option would enable the Fund to acquire
the underlying reference asset at the exercise price of the call option plus the premium paid. So
long as it holds a call option, rather than the underlying reference asset itself, the Fund is partially protected
from any unexpected increase in the market price of the underlying reference asset. If the market price does not
exceed the exercise price, the Fund could purchase the underlying reference asset on the open market and could
allow the call option to expire, incurring a loss only to the extent of the premium paid for the option.
Municipal Market Data Rate Locks. A Municipal Market Data Rate Lock (MMD Rate Lock) permits the Fund to lock in a specified municipal interest rate for a portion of its portfolio
to preserve a return on a particular investment or a portion of its portfolio as a duration management technique
or to protect against any increase in the price of securities to be purchased at a later date. MMD Rate Locks
may be used for hedging purposes. An MMD Rate Lock is an agreement between two parties, the Fund and an MMD
Rate Lock provider, pursuant to which the parties agree to make payments to each other on a
notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is
above or below a specified level on the expiration date of the contract.
MMD Rate Locks involve the risk that municipal yields will move in the direction opposite
than the direction anticipated by the Fund. The risk of loss with respect to MMD Rate Locks
is limited to the amount of payments the Fund is contractually obligated to make. If the other party to an MMD
Rate Lock defaults, the Fund's risk of loss consists of the amount of payments that the Fund contractually
is entitled to receive. If there is a default by the counterparty, the Fund may have contractual remedies pursuant
to the agreements related to the transaction, but they could be difficult to enforce.
Straddles/Spreads/Collars.
Spread and straddle options transactions. In “spread” transactions, the Fund buys and writes a put or buys and writes a call on the same underlying instrument with the options having different
exercise prices, expiration dates, or both. In “straddles,” the Fund purchases a put option and a call option or writes a put option and a call option on the same instrument with the same expiration date and
typically the same exercise
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price. When the Fund engages in spread and straddle transactions, it seeks to profit
from differences in the option premiums paid and received and in the market prices of the related options
positions when they are closed out or sold. Because these transactions require the Fund to buy and/or write
more than one option simultaneously, the Fund’s ability to enter into such transactions and to liquidate its positions when necessary or deemed advisable may be more limited than if the Fund were to buy or sell a single
option. Similarly, costs incurred by the Fund in connection with these transactions will in many cases be greater
than if the Fund were to buy or sell a single option.
Option Collars. The Fund also may use option “collars.” A “collar” position combines a put option purchased by the Fund (the right of the Fund to sell a specific security within a
specified period) with a call option that is written by the Fund (the right of the counterparty to buy the same
security) in a single instrument. The Fund’s right to sell the security is typically set at a price that is below the counterparty’s right to buy the security. Thus, the combined position “collars” the performance of the underlying security, providing protection from depreciation below the price specified in the put option, and allowing
for participation in any appreciation up to the price specified by the call option.
Rights and Warrants. Rights are equity securities representing a preemptive right of stockholders to purchase additional shares of a stock at the time of a new issuance, before the stock
is offered to the general public. A stockholder who purchases rights may be able to retain the same ownership
percentage after the new stock offering. A right usually enables the stockholder to purchase common stock
at a price below the initial offering price. A Fund that purchases a right takes the risk that the right
might expire worthless because the market value of the common stock falls below the price fixed by the right.
The Fund may purchase warrants. A warrant gives the holder the right to purchase
securities from the issuer at a specific price within a certain time frame and is similar to a call option.
The main difference between warrants and call options is that warrants are issued by the company that
will issue the underlying security, whereas options are not issued by the company. Young, unseasoned companies
often issue warrants to finance their operations.
Futures Contracts. The Fund may enter into futures contracts.
A futures contract is a standardized agreement to buy or sell a specified amount of
a specified security, currency, commodity, interest rate or index (or deliver a cash settlement price, in
the case of certain futures such as an index future, interest rate future or volatility future) for a specified
price at a designated future date, time and place. A “sale” of a futures contract means the acquisition of a contractual obligation to deliver the underlying instrument or asset called for by the contract at a specified price on a specified date. A “purchase” of a futures contract means the acquisition of a contractual obligation to acquire
the underlying instrument or asset called for by the contract at a specified price on a specified date. Futures
contracts are generally bought and sold on futures exchanges referred to as designated contract markets and are held
through a broker, known as a futures commission merchant (FCM), that is a member of the designated contract
market and its related clearinghouse. The designated contract market sets the specifications of the
relevant futures contract, including the date, time and place of delivery or settlement of the contract and the
quantity of the underlying instrument or asset per contract.
The Fund will only enter into futures contracts that are traded (either domestically
or internationally) on futures exchanges or certain exempt markets including exempt boards of trade and electronic
trading facilities; and are standardized as to maturity date and underlying instrument or
asset. Futures exchanges and trading thereon in the United States are regulated under the CEA by the CFTC. Foreign
futures exchanges or exempt markets and trading thereon are not regulated by the CFTC and may not be subject
to the same regulatory controls. In addition, futures contracts that are traded on non-U.S. exchanges
or exempt markets may not be as liquid as those purchased on CFTC-designated contract markets. For a
further discussion of the risks associated with investments in foreign securities, see “Foreign Investments” above.
Brokerage fees are incurred when a futures contract is bought or sold, and margin
deposits must be maintained at all times when a futures contract is outstanding. “Margin” for a futures contract is the amount of funds that must be deposited by the Fund with the applicable FCM in order to initiate
trading in the futures
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contract and maintain its open positions in futures contract. A margin deposit made
when the futures contract is entered (initial margin) is intended to ensure the Fund’s performance under the futures contract. The initial margin required for a particular futures contract is set by the exchange on which
the futures contract is traded and may be significantly modified from time to time by the exchange or the FCM during
the term of the futures contract.
Subsequent payments, called “variation margin,” received from or paid to the FCM through which the Fund holds the futures contract will be made on a daily basis as the futures contract
price fluctuates making the futures contract more or less valuable, a process known as marking-to-market.
When the futures contract is closed out, if the Fund has a loss equal to or greater than the margin amount,
the margin amount is paid to the FCM along with any loss in excess of the margin amount. If the Fund has a loss
of less than the margin amount, the excess margin is returned to the Fund. If the Fund has a gain, the full
margin amount and the amount of the gain are paid to the Fund and the FCM pays the Fund any excess gain
over the margin amount.
There is a risk of loss by the Fund of the initial and variation margin deposits in
the event of bankruptcy or insolvency of the FCM with which the Fund has an open position in a futures contract.
The assets of the Fund may not be fully protected in the event of the bankruptcy or insolvency of the FCM
or clearinghouse because the Fund might be limited to recovering only a pro rata share of all available funds
and margin segregated on behalf of an FCM’s customers. If the FCM does not provide accurate reporting, the Fund is also subject to the risk that the FCM could use the Fund’s assets, which are held in an omnibus account with assets belonging to the FCM’s other customers, to satisfy its own financial obligations or the payment obligations of another customer to the clearinghouse.
Closing out an open futures contract is effected by entering into an offsetting futures
contract for the same aggregate amount of the identical underlying instrument or asset and the same delivery
or settlement date. There can be no assurance, however, that the Fund will be able to enter into an offsetting
contract with respect to a particular futures contract at a particular time. If the Fund is not
able to enter into an offsetting contract, it will continue to be required to maintain the margin deposits on the futures
contract.
In addition, if the Fund were unable to liquidate a futures contract or an option
on a futures contract position due to the absence of a liquid secondary market or the imposition of price
limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect
to the position. In addition, except in the case of purchased options, the Fund would continue to be required
to make daily variation margin payments.
Types of Futures Contracts:
Commodity Futures: A commodity futures contract is an exchange-traded contract to buy or sell a particular commodity at a specified price at some time in the future. Commodity futures
contracts are highly volatile; therefore, the prices of a Fund’s shares may be subject to greater volatility to the extent it invests in commodity futures.
Currency Futures: A currency futures contract is a standardized, exchange-traded contract to buy or
sell a particular currency at a specified price at a future date (commonly three months or
more). Currency futures contracts may be highly volatile and thus result in substantial gains or losses to
the Fund.
The Fund may either exchange the currencies specified at the maturity of a currency
futures contract or, prior to maturity, enter into a closing transaction involving the purchase or sale
of an offsetting contract. The Fund may also enter into currency futures 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. Closing transactions with respect to currency futures contracts are usually effected with
the counterparty to the original currency futures contract.
Index Futures: An index futures contract is an exchange-traded contract that provides for the delivery,
at a designated date, time and place, of an amount of cash equal to a specified dollar
amount times the difference
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between the index value at the close of trading on the date specified in the contract
and the price agreed upon in the futures contract; no physical delivery of securities comprising the index
is made. Index futures can be based on stock, bond or other indices. Such indices cannot be purchased or sold
directly.
Interest Rate Futures: An interest rate futures contract is an exchange-traded contract in which the specified underlying security is either an interest-bearing fixed income security
or an inter-bank deposit. Two examples of common interest rate futures contracts are U.S. Treasury futures and SOFR futures contracts. The specified security for U.S. Treasury futures is a U.S. Treasury security. The
specified security for SOFR futures is the Secured Overnight Financing Rate (SOFR), which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
Dividend Futures: A dividend futures contract is an exchange-traded contract to purchase or sell an
amount equal to the total dividends paid by a selected security, basket of securities
or index, over a period of time for a specified price that is based on the expected dividend payments from the
selected security, basket of securities or index.
Security Futures: A security futures contract is an exchange-traded contract to purchase or sell, in
the future, a specified quantity of a security (other than a Treasury security), or a
narrow-based securities index at a certain price.
Options on Futures Contracts. Options on futures contracts are similar to options on securities or currencies except that options on futures contracts give the purchaser the right,
in return for the premium paid, to assume a position in a futures contract (a long position if the option is
a call and a short position if the option is a put) at a specified exercise price at any time during the period of the
option. Upon exercise of the option, the delivery of the futures contract position by the writer of the option
to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures contract margin account.
Forward Foreign Currency Contracts. The Fund may enter into forward foreign currency contracts to hedge against adverse movements in the foreign currencies in which portfolio securities
are denominated. The Fund may also enter into forward foreign currency transactions for speculative
purposes, including to seek additional income or increased returns for the Fund.
A forward foreign currency contract is an obligation to buy or sell a particular currency
in exchange for another currency, which may be U.S. dollars, at a specified exchange rate on a future
date. Forward foreign currency contracts are typically individually negotiated and privately traded by currency
traders and their customers in the interbank market. The Fund may enter into forward foreign currency
contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions
generally.
At the maturity of a forward foreign currency contract, the Fund may either exchange
the currencies specified at the maturity of the contract or, prior to maturity, the Fund may enter
into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with
respect to forward foreign currency contracts may or may not be effected with the counterparty to the original
forward contract. The Fund may also enter into forward foreign currency contracts that do not provide for
physical exchange of the two currencies on the settlement date but instead provide for settlement 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).
Under definitions adopted by the CFTC and SEC, non-deliverable forwards are considered
swaps, and therefore are included in the definition of “commodity interests.” Although non-deliverable forwards have historically been traded in the OTC market, as swaps they may in the future be required
to be centrally cleared and traded on public execution facilities. For more information on central
clearing and trading of cleared swaps, see “Swaps” and “Special Regulatory Risks of Derivatives.” Forward foreign currency contracts that qualify as deliverable forwards are not regulated as swaps for most
purposes, and are not included in the definition of “commodity interests.” However these forwards are subject to some requirements applicable to swaps, including reporting to swap data repositories, documentation
requirements, and business conduct rules applicable to swap dealers. CFTC regulation of forward foreign currency
contracts, especially
70
non-deliverable forwards, may restrict the Fund’s ability to use these instruments in the manner described above or subject Invesco to CFTC registration and regulation as a CPO.
The cost to the Fund of engaging in forward foreign currency contracts varies with
factors such as the currencies involved, the length of the contract period, differences in prevailing
interest rates in the jurisdictions associated with the two currencies and the prevailing market conditions. Because forward
foreign currency contracts are usually entered into on a principal basis, no fees or commissions are
typically involved. The use of forward foreign currency contracts for hedging does not eliminate fluctuations
in the prices of the underlying securities the Fund owns or intends to acquire, but it does establish a rate of exchange
in advance. While forward foreign currency contract sales limit the risk of loss due to a decline in
the value of the hedged currencies, they also limit any potential gain that might result should the value
of the currencies increase.
LIBOR Transition Risk
A Fund may have investments in financial instruments that recently transitioned from, or continue to be tied to, the London Interbank Offered Rate (LIBOR) as the reference or benchmark rate for
variable interest rate calculations (including variable or floating rate debt securities or loans and
derivatives such as interest rate futures or swaps). LIBOR was a common benchmark interest rate index historically used to make adjustments to variable-rate debt instruments, to determine interest rates for a variety
of financial instruments and borrowing arrangements and as a reference rate in derivative contracts.
The UK Financial Conduct Authority (FCA), the regulator that oversees LIBOR, has ceased publishing the majority of LIBOR rates. In April 2023, the FCA announced that some USD LIBOR settings will continue to be published under a synthetic methodology until September 30, 2024 for certain legacy contracts, but any such rates are considered non-representative of the underlying market. Regulators and financial industry working groups have worked to identify alternative reference rates (ARRs) to replace LIBOR and to assist with
the transition to the new ARRs. Under U.S. regulations that implement a statutory fallback mechanism to replace LIBOR, benchmark rates based on the Secured Overnight Financing Rate (“SOFR”) have replaced LIBOR in certain financial contracts. SOFR is a broad measure of the cost of overnight borrowing of cash through repurchase agreements collateralized by U.S. Treasury securities.
While the transition process away from LIBOR has become increasingly well-defined,
there remains uncertainty and risks relating to converting certain longer-term securities and transactions to a new ARR. For example, there can be no assurance that the composition or characteristics of any
ARRs or financial instruments in which a Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume
or liquidity. Additionally, while some legacy USD LIBOR instruments may provide for an alternative or fallback rate-setting methodology, there may be significant uncertainty regarding the effectiveness of such
methodologies to replicate USD LIBOR; other legacy USD LIBOR instruments may not include such fallback rate-setting provisions at all or may not be able to rely on the statutory fallback mechanism, the effectiveness of which is also uncertain. There also remains significant uncertainty regarding the effectiveness of the Adjustable Interest Rate Act legislation. While it is expected that the market participants will amend legacy financial instruments referencing LIBOR to include such fallback provisions to ARRs, there remains uncertainty regarding the willingness and ability of parties to add or amend such fallback provisions in legacy instruments. Moreover, certain aspects of the transition from LIBOR will rely on the actions of third-party market participants, such as clearing houses, trustees, administrative agents, asset servicers and certain service providers; the Adviser cannot guarantee the performance of such market participants and any failure
on the part of such market participants to manage their part of the LIBOR transition could
impact a Fund. The Funds may have instruments linked to other interbank offered rates that may also cease to
be published in the future. All of the foregoing may adversely affect a Fund’s performance or NAV.
Environmental, Social and Governance (ESG) Considerations
The ESG considerations described herein may not be used by a Fund and will vary depending
on a Fund's particular investment strategy and in accordance with what a Fund’s investment team deems relevant when making investment decisions. The ESG considerations described herein may not
be applied or
71
evaluated with respect to each issuer or Fund investment. Further, a Fund’s prospectus may describe additional ESG strategies and risks.
ESG considerations, either quantitative or qualitative, may be utilized as a component
of a Fund's investment process to implement its investment strategy in pursuit of its investment
objective. ESG factors may be incorporated to evaluate an issuer, as part of risk analysis, credit analysis
or in other manners. ESG factors may vary across types of investments and issuers, and not every ESG factor
may be identified or evaluated. The incorporation of ESG factors may affect a Fund’s exposure to certain issuers or industries and may not work as intended. A Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different methodology to identify
and/or incorporate ESG factors. Because ESG considerations may be used as one part of an overall investment
process, a Fund may still invest in securities of issuers that are not considered ESG-focused or that
may be viewed as having a high ESG risk profile. As investors can differ in their views regarding ESG factors,
a Fund may invest in issuers that do not reflect the views with respect to ESG of any particular investor.
Information used by a Fund to evaluate such factors, including information from reliance on third-party research
and/or proprietary research, may not be readily available, complete or accurate, and may vary across
providers and issuers as ESG is not a uniformly defined characteristic, which could negatively impact a Fund’s ability to accurately assess an issuer, which could negatively impact a Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to a Fund’s performance.
Receipt of Issuer’s Nonpublic Information
The Adviser or Sub-Advisers (through their portfolio managers, analysts, or other
representatives) may receive material nonpublic information about an issuer that may restrict the ability
of the Adviser or Sub-Advisers to cause the Fund to buy or sell securities of the issuer on behalf of the Fund for
substantial periods of time. This may impact the Fund's ability to realize profit or avoid loss with respect
to the issuer and may adversely affect the Fund's flexibility with respect to buying or selling securities,
potentially impacting Fund performance. For example, activist investors of certain issuers in which the Adviser
or Sub-Advisers hold large positions may contact representatives of the Adviser or Sub-Advisers and may disclose
material nonpublic information in such communication. The Adviser or Sub-Advisers would be restricted
from trading on the basis of such material nonpublic information, limiting their flexibility in managing the
Fund and possibly impacting Fund performance.
Business Continuity and Operational Risk
The Adviser, the Funds and the Funds’ service providers may experience disruptions or operating errors, such as processing errors or human errors, inadequate or failed internal or external
processes, systems or technology failures, or other disruptive events, that could negatively impact and
cause disruptions in normal business operations of the Adviser, the Funds or the Funds’ service providers. The Adviser has developed a Business Continuity Program (the “Program”) designed to minimize the disruption of normal business operations in the event of an adverse incident affecting the Funds, the Adviser and/or
its affiliates. The Program is also designed to enable the Adviser to reestablish normal business operations
in a timely manner during such an adverse incident; however, there are inherent limitations in such programs
(including the possibility that contingencies have not been anticipated and procedures do not work
as intended) and, under some circumstances (e.g. natural disasters, terrorism, public health crises, power
or utility shortages and failures, system failures or malfunctions), the Adviser, its affiliates, and any service
providers or vendors used by the Adviser, its affiliates, or the Fund could be prevented or hindered from providing
services to the Funds for extended periods of time. These circumstances could cause disruptions and negatively impact the Funds’ service providers and the Funds’ business operations, potentially including an inability to process Fund shareholder transactions, an inability to calculate a Fund’s net asset value and price the Fund’s investments, and impediments to trading portfolio securities.
Cybersecurity Risk
With the increased use of technologies such as the Internet to conduct business, the
Fund, like all companies, may be susceptible to operational, information security and related risks.
Cybersecurity incidents
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involving the Fund and its service providers (including, without limitation, a Fund’s investment adviser, sub-adviser, fund accountant, custodian, transfer agent and financial intermediaries) have the
ability to cause disruptions and impact business operations, potentially resulting in financial losses,
impediments to trading, the inability of Fund shareholders to transact business, violations of applicable
privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs.
Cybersecurity incidents can result from deliberate cyberattacks or unintentional events
and may arise from external or internal sources. Cyberattacks may include infection by malicious
software or gaining unauthorized access to digital systems, networks or devices that are used to service
the Funds' operations (e.g., by “hacking” or “phishing”). Cyberattacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites
(i.e., efforts to make network services unavailable to intended users). These cyberattacks could cause the
misappropriation of assets or personal information, corruption of data or operational disruptions. Geopolitical
tensions may, from time to time, increase the scale and sophistication of deliberate cyberattacks.
Similar adverse consequences could result from cybersecurity incidents affecting issuers
of securities in which the Fund invests, counterparties with which the Fund engage, governmental and
other regulatory authorities, exchange and other financial market operators, banks, brokers, dealers,
insurance companies, other financial institutions and other parties. In addition, substantial costs may
be incurred in order to prevent any cybersecurity incidents in the future. Although the Funds’ service providers may have established business continuity plans and risk management systems to mitigate cybersecurity risks,
there can be no guarantee or assurance that such plans or systems will be effective, or that all risks
that exist, or may develop in the future, have been completely anticipated and identified or can be protected
against. The Fund and its shareholders could be negatively impacted as a result.
Natural Disaster/Epidemic Risk
Natural or environmental disasters such as earthquakes, wildfires, floods, hurricanes, tsunamis, other severe weather-related phenomena, and widespread disease including pandemics and epidemics, can be highly disruptive to economies and markets, sometimes severely so, and can adversely impact individual companies, sectors, industries, markets, currencies, interest and inflation rates,
credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. Given the increasing interdependence among global economies and markets, conditions in one country, market,
or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange
rates in other countries, including the U.S. These disruptions could prevent the Funds from executing advantageous investment decisions in a timely manner and negatively impact the Funds’ ability to achieve their investment objectives. Any such event(s) could have a significant adverse impact on the value and risk profile
of the Funds.
The recent spread of the human coronavirus disease 2019 (COVID-19) is an example. In the first quarter of 2020, the World Health Organization (WHO) recognized COVID-19 as a global pandemic
and both the WHO and the U.S. declared the outbreak a public health emergency. The subsequent spread of COVID-19 resulted in, among other significant adverse economic impacts, instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to
contain the spread of COVID-19 resulted in travel restrictions, closed international borders, disruptions of healthcare
systems, business operations (including business closures) and supply chains, employee layoffs and general lack of employee availability, lower consumer demand, and defaults and credit downgrades, all of which contributed to disruption of global economic activity across many industries and exacerbated other pre-existing political, social and economic risks domestically and globally. Although the WHO and the U.S. ended their declarations of COVID-19 as a global health emergency in May 2023, the full economic impact at the macro-level and on individual businesses, as well as the potential for a future reoccurrence of COVID or the occurrence of a
similar epidemic or pandemic, are unpredictable and could result in significant and prolonged adverse impact on economies and financial markets in specific countries and worldwide and thereby
negatively affect a Fund’s performance.
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Litigation Risk
From time to time, a Fund may pursue or be involved as a named party in litigation arising in connection
with its role or status as a shareholder, bondholder, lender or holder of portfolio
investments, its own activities, or other circumstances. Litigation that affects a Fund’s portfolio investments may result in the reduced value of such investments or higher portfolio turnover if the Fund determines to sell such
investments. Litigation could result in significant expenses, reputational damage, increased insurance premiums,
adverse judgment liabilities, settlement liabilities, injunctions, diversions of Fund resources, disruptions
to Fund operations and/or other similar adverse consequences, any of which may increase the expenses
incurred by a Fund or adversely affect the value of the Fund’s shares.
Fund Policies
Fundamental Restrictions. Except as otherwise noted below, the Fund is subject to the following investment restrictions, which may be changed only by a vote of the Fund’s outstanding shares. Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund’s shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person
or represented by proxy, or (ii) more than 50% of the Fund’s outstanding shares.
(1) The Fund is a “diversified company” as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified
company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules and regulations are amended from time to time or are interpreted from time to time
by the SEC staff (collectively, the “1940 Act Laws and Interpretations”) or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940
Act Laws and Interpretations, the “1940 Act Laws, Interpretations and Exemptions”). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent
permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted
by the 1940 Act Laws, Interpretations and Exemptions
(3) The Fund may not underwrite the securities of other issuers. This restriction
does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale
of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter
under the 1933 Act.
(4) The Fund will not make investments that will result in the concentration (as that
term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments
in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund’s investments in (i) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities,
or (ii) tax-exempt obligations issued by governments or political subdivisions of governments.
In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial
guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a
result of ownership of securities or other instruments. This restriction does not prevent the Fund from
investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests
therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase or sell physical commodities except to the extent permitted
by the 1940 Act and any other governing statute, and by the rules thereunder, and by the SEC or
other regulatory agency with authority over the Fund.
(7) The Fund may not make personal loans or loans of its assets to persons who control
or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations
and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing
debt
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obligations, entering into repurchase agreements, loaning its assets to broker-dealers
or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide the Fund with the ability to operate
under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without
receiving prior shareholder approval of the change. Even though the Fund has this flexibility, the
Board has adopted non-fundamental restrictions for the Fund relating to certain of these restrictions which Invesco
and, when applicable, the Sub-Advisers must follow in managing the Fund. Any changes to these
non-fundamental restrictions, which are set forth below, require the approval of the Board.
Explanatory Note
For purposes of the Fund’s fundamental restriction related to industry concentration above, investments in tax-exempt municipal securities where the payment of principal and interest for such
securities is derived solely from a specific project associated with an issuer that is not a governmental
entity or a political subdivision of a government are subject to the Fund’s industry concentration policy.
For purposes of the Fund’s fundamental restriction related to physical commodities above, the Fund is currently permitted to invest in futures, swaps and other instruments on physical
commodities to the extent permitted by the fundamental restriction and the 1940 Act does not prohibit a fund
from owning commodities or contracts related to commodities. The extent to which the Fund can invest in futures,
swaps and other instruments on physical commodities, and/or commodities or contracts related to commodities
is set out in the investment strategies described in the Fund’s prospectus and this SAI and permitted by the Fund’s fundamental restriction.
For purposes of the Fund’s fundamental restriction related to real estate above, the 1940 Act does not prohibit a fund from owning real estate. The extent to which the Fund can invest in
real estate is set out in the investment strategies described in the Fund’s prospectus or this SAI.
For purposes of the Fund’s fundamental restriction related to senior securities above, the 1940 Act prohibits a fund from issuing a “senior security,” which is generally defined as any bond, debenture, note, or similar obligation or instrument constituting a security and evidencing indebtedness,
or any stock of a class having priority over any other class of the fund’s shares with respect to the payment of dividends or the distribution of fund assets, except that the fund may borrow money as described above.
For purposes of the Fund’s fundamental restriction related to loans above made by the Fund, current SEC staff interpretations under the 1940 Act prohibit a fund from lending more than one-third
of its total assets, except through the purchase of debt obligations or the use of repurchase agreements.
Non-Fundamental Restrictions. Non-fundamental restrictions may be changed for the Fund without shareholder approval.
(1) In complying with the fundamental restriction regarding issuer diversification,
the Fund will not, with respect to 75% of its total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities and
securities issued by other investment companies), if, as a result, (i) more than 5% of the Fund’s total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10%
of the outstanding voting securities of that issuer. The Fund may purchase securities of other investment
companies as permitted by the 1940 Act Laws, Interpretations and Exemptions.
In complying with the fundamental restriction regarding issuer diversification, the
Fund will regard each state (including the District of Columbia and Puerto Rico), territory and possession
of the United States, each political subdivision, agency, instrumentality and authority thereof, and each
multi-state agency of which a state is a member as a separate “issuer.” When the assets and revenues of an agency,
75
authority, instrumentality or other political subdivision are separate from the government
creating the subdivision and the security is backed only by assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the case of an Industrial Development
Bond or Private Activity Bond, if that bond is backed only by the assets and revenues of the
non-governmental user, then that non-governmental user would be deemed to be the sole issuer. However,
if the creating government or another entity guarantees a security, then to the extent that the value
of all securities issued or guaranteed by that government or entity and owned by the Fund exceeds 10% of the Fund’s total assets, the guarantee would be considered a separate security and would be treated
as issued by that government or entity. Securities issued or guaranteed by a bank or subject to
financial guaranty insurance are not subject to the limitations set forth in the preceding sentence
(2) In complying with the fundamental restriction regarding borrowing money and issuing
senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total
assets (including the amount borrowed) less liabilities (other than borrowings).
(3) In complying with the fundamental restriction regarding industry concentration,
the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business
activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the
Fund may lend up to 33 1/3% of its total assets and may lend money to an Invesco Fund, on such terms and
conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets
in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management
investment company with the same fundamental investment objective, policies and restrictions
as the Fund.
(6) The Fund invests, under normal circumstances, at least 80% of its assets in debt
securities that are determined to be below investment grade quality.
For purposes of the foregoing, “assets” means net assets, plus the amount of any borrowings for investment purposes. Derivatives and other instruments that have economic characteristics
similar to the securities in the Fund’s 80% policy described above for the Fund may also be counted toward the Fund’s 80% policy. The Fund will provide written notice to its shareholders prior to any change
to this policy, as required by the 1940 Act Laws, Interpretations and Exemptions.
It is the intention of the Fund, unless otherwise indicated, that with respect to the Fund’s policies that are a result of application of law, the Fund will take advantage of the flexibility provided
by rules or interpretations of the SEC currently in existence or promulgated in the future, or changes to such
laws.
Portfolio Turnover
The Fund calculates its portfolio turnover rate by dividing the value of the lesser
of purchases or sales of portfolio securities for the fiscal period by the monthly average of the value of
portfolio securities owned by the Fund during the fiscal period. A 100% portfolio turnover rate would occur, for example,
if all of the portfolio securities (other than short-term securities) were replaced once during the fiscal
period. Portfolio turnover rates will vary from year to year, depending on market conditions.
Policies and Procedures for Disclosure of Fund Holdings
The Board has adopted policies and procedures with respect to the disclosure of the
Fund's portfolio holdings (the Holdings Disclosure Policy). Invesco and the Board may amend the Holdings
Disclosure Policy at any time without prior notice. Details of the Holdings Disclosure Policy and a
description of the basis on which employees of Invesco and its affiliates may release information about portfolio
securities in certain contexts are provided below. As used in the Holdings Disclosure Policy and throughout
the SAI, the term “portfolio holdings information” includes information with respect to the portfolio holdings of the Fund, including holdings that are derivatives and holdings held as short positions. Information
generally excluded from “portfolio holdings information” includes, without limitation, (i) descriptions of allocations among asset
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classes, regions, countries, industries or sectors; (ii) aggregated data such as average
or median ratios, market capitalization, credit quality or duration; (iii) performance attributions
by asset class, country, industry or sector; (iv) aggregated risk statistics, analysis and simulations, such as stress
testing; (v) the characteristics of the stock and bond components of the Fund’s portfolio holdings and other investment positions; (vi) the volatility characteristics of the Fund; (vii) information on how
various weightings and factors contributed to Fund performance; (viii) various financial characteristics of the Fund
or its underlying portfolio investments; and (ix) other information where, in the reasonable belief of the Fund's
Chief Compliance Officer (or a designee), the release of such information would not present risks of dilution,
arbitrage, market timing, insider trading or other inappropriate trading for the applicable Fund.
Public release of portfolio holdings. The Fund discloses the following portfolio holdings information at www.invesco.com/us. 1
|
Information
|
Approximate Date of Website Posting
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Information Remains Posted
on Website
|
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Select portfolio holdings information,
such as top ten holdings as of the
month-end
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7 business days after month-end
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Until replaced with the
following month’s top ten
holdings
|
|
|
|
|
|
Select portfolio holdings information
(e.g., buys/sells,
contributors/detractors and/or
relevant to market environment)
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7 business days after month-end
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Until replaced with the
following month’s select
portfolio holdings
information
|
|
|
|
|
|
Complete portfolio holdings
information as of calendar month-
end
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10 business days after month-end
|
For 12 months from the
date of posting
|
|
|
|
|
|
Complete portfolio holdings
information as of fiscal quarter-end
|
60-70 calendar days after fiscal quarter-end
|
For 12 months from the
date of posting
|
1
To locate the Fund’s portfolio holdings information go to www.invesco.com/us, select “Financial Professional” or “Individual Investor,” if applicable. Hover over the “Products” tab and then click on “Mutual Funds.” On the “Mutual Funds” page click on “Fund Materials.” Links to the Fund’s portfolio holdings are located under the “Holdings” column.
You may also obtain the publicly available portfolio holdings information described
above by contacting us at 1-800-959-4246.
Notwithstanding the other provisions of the Holdings Disclosure Policy, Invesco and
its affiliates may disclose portfolio holdings information on its website earlier than dictated by the
Holdings Disclosure Policy in the case of market, geopolitical or company-specific (or other) events that cause
Invesco to conclude that posting such information on its website is consistent with its fiduciary duties to
the Funds.
Selective disclosure of portfolio holdings information pursuant to Non-Disclosure Agreement. Employees of Invesco and its affiliates may disclose non-public full portfolio holdings
information on a selective basis only if Invesco approves the parties to whom disclosure of non-public
full portfolio holdings information will be made. Invesco must determine that the proposed selective disclosure
will be made for business purposes of the applicable Fund and is in the best interest of the applicable Fund’s shareholders. In making such determination, Invesco will address any perceived conflicts of interest
between shareholders of such Fund and Invesco or its affiliates as part of granting its approval.
The Board exercises continuing oversight of the disclosure of Fund portfolio holdings
information by (1) overseeing the implementation and enforcement of the Holdings Disclosure Policy and the Invesco Funds’ Code of Ethics by the Chief Compliance Officer (or his designee) of Invesco and the
Invesco Funds and (2) considering reports and recommendations by the Chief Compliance Officer concerning
any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7
under the Investment Advisers Act of 1940, as amended (the Advisers Act)) that may arise in connection with the Holdings Disclosure Policy. Pursuant to the Holdings Disclosure Policy, the Board receives
reports on the specific types
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of situations in which Invesco proposes to provide such selective disclosure and the
situations where providing selective disclosure raises perceived conflicts of interest between shareholders
of the applicable Fund and Invesco or its affiliates. In any specific situation where Invesco addresses
a perceived conflict, Invesco will report to the Board on the persons to whom such disclosures are to be
made and the treatment of any such conflicts before agreeing to provide selective disclosure.
Invesco discloses non-public full portfolio holdings information to the following
persons in connection with the day-to-day operations and management of the funds advised by Invesco (the Invesco
Funds):
●
Attorneys and accountants;
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Securities lending agents;
●
Lenders to the Invesco Funds;
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Rating and rankings agencies;
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Persons assisting in the voting of proxies;
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Invesco Funds’ custodians;
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The Invesco Funds’ transfer agent(s) (in the event of a redemption in kind);
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Pricing services, market makers, or other fund accounting software providers (to determine
the price of investments held by an Invesco Fund);
●
Brokers identified by the Invesco Funds’ portfolio management team who provide execution and research services to the team;
●
Analysts hired to perform research and analysis for the Invesco Funds’ portfolio management team; and
●
Insurance companies which may receive portfolio holdings information before Invesco posts portfolio holdings information to Invesco's website (to allow such insurance companies to post portfolio holdings information to their websites at approximately the same time that Invesco
posts portfolio holdings information to Invesco's website).
In many cases, Invesco will disclose current portfolio holdings information on a daily
basis to these persons. In these situations, Invesco has entered into non-disclosure agreements which
provide that the recipient of the portfolio holdings information will maintain the confidentiality
of such portfolio holdings information and will not trade on such information (Non-disclosure Agreements). Please
refer to Appendix B for a list of examples of persons to whom Invesco provides non-public portfolio holdings
information on an ongoing basis.
Invesco will also disclose non-public portfolio holdings information if such disclosure
is required by applicable laws, rules or regulations, or by regulatory authorities having jurisdiction
over Invesco and its affiliates or the Invesco Funds, and where there is no other way to transact the Fund's business without disclosure of such portfolio holdings information.
The Holdings Disclosure Policy provides that the Fund, Invesco or any other party in connection with the disclosure of portfolio holdings information will not request, receive or accept any
compensation (including compensation in the form of the maintenance of assets in the Fund or other mutual fund or account managed by Invesco or one of its affiliates) for the selective disclosure of portfolio holdings
information.
Disclosure of certain portfolio holdings information without Non-Disclosure Agreement. Invesco and its affiliates that provide services to the Fund, the Sub-Advisers and each of their employees may receive or have access to portfolio holdings information as part of the day to day operations of the Fund.
Employees of Invesco and its affiliates may express their views orally or in writing on one
or more of the Fund's portfolio investments or may state that the Fund has recently purchased or sold, or continues to own, one or more investments. The investments subject to these views and statements may
be ones that were
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purchased or sold since the date on which portfolio holdings was made available on the Fund’s website and therefore may not be reflected on the portfolio holdings information disclosed on the website. Such views and statements may be made to various persons, including members of the press, shareholders
in the applicable Fund, persons considering investing in the applicable Fund or representatives of such
shareholders or potential shareholders, such as fiduciaries of a 401(k) plan and their advisers. The
nature and content of the views and statements provided to each of these persons may differ.
Disclosure of portfolio holdings information to traders. Additionally, employees of Invesco and its affiliates may disclose one or more of the investments held by the Fund when purchasing
and selling investments through broker-dealers, futures commissions merchants, clearing agencies
and other counterparties requesting bids on investments, obtaining price quotations on investments,
or in connection with litigation involving the Fund's portfolio investments. Invesco does not enter
into formal Non-Disclosure Agreements in connection with these situations; however, the Fund would not continue
to conduct business with a person who Invesco believed was misusing the disclosed information.
Disclosure of portfolio holdings of other Invesco-managed products. Invesco and its affiliates manage products sponsored by companies other than Invesco, including investment companies,
offshore funds, and separate accounts. In many cases, these other products are managed in a
similar fashion to certain Invesco Funds (as defined herein) and thus have similar portfolio holdings.
The sponsors of these other products managed by Invesco and its affiliates may disclose the portfolio holdings
of their products at different times than Invesco discloses portfolio holdings for the Invesco Funds.
MANAGEMENT OF THE TRUST
Board of Trustees
The Trustees and officers of the Trust, their principal occupations during at least
the last five years and certain other information concerning them are set forth in Appendix C.
Qualifications and Experience. In addition to the information set forth in Appendix C, the following sets forth additional information about the qualifications and experience of each of the
Trustees.
Interested Trustees
Jeffrey H. Kupor, Trustee
Jeffrey Kupor has been a member of the Board of Trustees of the Invesco Funds since 2024. Mr. Kupor is Senior Managing Director and General Counsel at Invesco Ltd.
Mr. Kupor joined Invesco Ltd. in 2002 and has held a number of legal roles, including, most recently, Head of Legal, Americas, in which role he was responsible for legal support for Invesco's Americas business. Prior to joining the firm, he practiced law at Fulbright & Jaworski LLP (now known as Norton Rose Fulbright), specializing in complex commercial and securities litigation. He also served as the general counsel of a publicly traded communication services company.
Mr. Kupor earned a BS degree in economics from the Wharton School at the University of Pennsylvania and a JD from the Boalt Hall School of Law (now known as Berkeley Law) at the University of California at Berkeley.
The Board believes that Mr. Kupor’s current and past positions with the Invesco complex along with his legal background and experience as an executive in the investment management area
benefits the Funds.
Douglas Sharp, Trustee
Douglas Sharp has been a member of the Board of Trustees of the Invesco Funds since
2024. Mr. Sharp is Senior Managing Director, Head of Americas & EMEA (Europe, the Middle East, and Africa) at Invesco Ltd. He also served as Director and Chairman of the Board of Invesco UK Limited (Invesco’s European subsidiary board) and as Director, Chairman and Chief Executive of Invesco Fund Managers Limited.
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Mr. Sharp joined Invesco Ltd. in 2008 and has served in multiple leadership roles
across the company, including his previous role as Head of EMEA. Prior to that, he ran Invesco Ltd.’s EMEA retail business and served as head of strategy and business planning and as chief administrative officer for Invesco Ltd.’s US institutional business. Before joining the firm, he was with the strategy consulting
firm McKinsey & Co., where he served clients in the financial services, energy, and logistics sectors.
The Board believes that Mr. Sharp’s current and past positions within the Invesco complex along with his experience in the investment management business benefits the Funds.
Independent Trustees
Beth Ann Brown, Trustee and Chair
Beth Ann Brown has been a member of the Board of Trustees of the Invesco Funds since
2019 and Chair since 2022. From 2016 to 2019, Ms. Brown served on the boards of certain investment companies
in the Oppenheimer Funds complex.
Ms. Brown has served as Director of Caron Engineering, Inc. since 2018 and as an Independent
Consultant since 2012.
Previously, Ms. Brown served in various capacities at Columbia Management Investment
Advisers LLC, including Head of Intermediary Distribution, Managing Director, Strategic Relations
and Managing Director, Head of National Accounts. She also served as Senior Vice President, National Account
Manager from 2002-2004 and Senior Vice President, Key Account Manager from 1999 to 2002 of Liberty Funds
Distributor, Inc. From 2013 through 2022, she served as Director, Vice President (through 2019) and
President (2019-2022) of Grahamtastic Connection, a non-profit organization.
From 2014 to 2017, Ms. Brown served on the Board of Advisors of Caron Engineering
Inc. and also served as President and Director of Acton Shapleigh Youth Conservation Corps, a non–profit organization, from 2012 to 2015.
The Board believes that Ms. Brown’s experience in financial services and investment management and as a director of other investment companies benefits the Funds.
Carol Deckbar, Trustee
Carol Deckbar has been a member of the Board of Trustees of the Invesco Funds since
2024. Ms. Deckbar previously served as Executive Vice President and Chief Product Officer at
Teachers Insurance and Annuity Association (TIAA) Financial Services from 2019 to 2021. She also served as
Executive Vice President and Principal of College Retirement Equities Fund at TIAA from 2014 to 2021.
Ms. Deckbar served in various other capacities at TIAA since joining in 2007, including Executive Vice
President and Head of Institutional Investments and Endowment Services from 2016 to 2019.
Prior to joining TIAA, Ms. Deckbar was a Senior Vice President of AMSOUTH Bank from
2002 to 2006, and before that she served as Senior Vice President, Managing Director, for Bank of
America Capital Management from 1999 to 2002. She began her asset management career with the Evergreen
Funds where she served as Senior Vice President, Managing Director from 1991 to 1998.
From 2019 to 2020, Ms. Deckbar served as Chairman of the TIAA Retirement Plan Investments
Committee and as an Executive Sponsor at Advance, a council for the advancement of
women. She has also held various memberships, including at Investment Company Institute, from 2017 to
2019, Fortune 400 Most Powerful Women Network, from 2012 to 2015, and Mutual Fund Education Alliance, from
2010 to 2015.
The Board believes that Ms. Deckbar’s experience in financial services and investment management benefits the Funds.
Cynthia Hostetler, Trustee
Cynthia Hostetler has been a member of the Board of Trustees of the Invesco Funds
since 2017.
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Ms. Hostetler is currently a member of the board of directors of the Vulcan Materials
Company, a public company engaged in the production and distribution of construction materials, Trilinc
Global Impact Fund LLC, a publicly registered non-traded limited liability company that invests in a diversified
portfolio of private debt instruments, and Resideo Technologies, Inc., a public company that manufactures and distributes smart
home security products and solutions worldwide. Ms. Hostetler also serves on the board of governors of the Investment Company Institute and is a member of the governing council of the Independent
Directors Council, both of which are professional organizations in the investment management industry.
Previously, Ms. Hostetler served as a member of the board of directors/trustees of
Aberdeen Investment Funds, a mutual fund complex, Edgen Group Inc., a public company that provides products
and services to energy and construction companies, from 2012 to 2013, prior to its sale to Sumitomo,
Genesee & Wyoming, Inc., a public company that owns and operates railroads worldwide, from 2018 to 2019,
prior to its sale to Brookfield Asset Management, and Textainer Group Holdings Ltd., a public company that is the world’s second largest shipping container leasing company, prior to its sale to Stonepeak
in March 2024. Ms. Hostetler was also a member of the board of directors of the Eisenhower Foundation,
a non-profit organization.
From 2001 to 2009, Ms. Hostetler served as Head of Investment Funds and Private Equity
at Overseas Private Investment Corporation (“OPIC”), a government agency that supports US investment in the emerging markets. Ms. Hostetler oversaw a multi-billion dollar investment portfolio in private
equity funds. Prior to joining OPIC, Ms. Hostetler served as President and member of the board of directors
of First Manhattan Bancorporation, a bank holding company, from 1991 to 2007, and its largest subsidiary,
First Savings Bank, from 1991 to 2006 (Board Member) and from 1996 to 2001 (President).
The Board believes that Ms. Hostetler’s knowledge of financial services and investment management, her experience as a director of other companies, including a mutual fund complex, her
legal background, and other professional experience gained through her prior employment benefit the Funds.
Dr. Eli Jones, Trustee
Dr. Eli Jones has been a member of the Board of Trustees of the Invesco Funds since
2016.
Dr. Jones has served as Board Member of the regional board, First Financial Bank Texas
since 2021 and Board Member, First Financial Bankshares, Inc. Texas since 2022. Since 2020, Dr. Jones has served as a director on the board of directors of Insperity, Inc. (“Insperity”). From 2004 to 2016, Dr. Jones was chair of the Compensation Committee, a member of the Nominating and Corporate Governance Committee
and a director on the board of directors of Insperity.
Dr. Jones is a Professor of Marketing, Lowry and Peggy Mays Eminent Scholar, and Dean
Emeritus of Mays Business School at Texas A&M University. From 2015 to 2021, Dr. Jones served
as Dean of Mays Business School at Texas A&M University. From 2012 to 2015, Dr. Jones was the dean
of the Sam M. Walton College of Business at the University of Arkansas and holder of the Sam M. Walton
Leadership Chair in Business. Prior to joining the faculty at the University of Arkansas, he was dean
of the E. J. Ourso College of Business and Ourso Distinguished Professor of Business at Louisiana State University
from 2008 to 2012; professor of marketing and associate dean at the C.T. Bauer College of Business at
the University of Houston from 2007 to 2008; an associate professor of marketing from 2002 to 2007; and an assistant
professor from 1997 until 2002. He taught at Texas A&M University for several years before joining
the faculty of the University of Houston.
Dr. Jones served as the executive director of the Program for Excellence in Selling
and the Sales Excellence Institute at the University of Houston from 1997 to 2007. Before becoming
a professor, he worked in sales and sales management for three Fortune 100 companies: Quaker Oats, Nabisco,
and Frito-Lay. Dr. Jones is a past director of Arvest Bank. He received his Bachelor of Science degree
in journalism in 1982, his MBA in 1986 and his Ph.D. in 1997, all from Texas A&M University.
The Board believes that Dr. Jones’ experience in academia and his experience in marketing benefits the Funds.
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Elizabeth Krentzman, Trustee
Elizabeth Krentzman has been a member of the Board of Trustees of the Invesco Funds
since 2019. From 2014 to 2019, Ms. Krentzman served on the boards of certain investment companies
in the Oppenheimer Funds complex.
Ms. Krentzman served from 2017 to 2022, as a member of the Cartica Funds Board of
Directors (private investment funds). Ms. Krentzman previously served as a member of the Board of Trustees
of the University of Florida National Board Foundation from 2016 to 2021. She also served as a member
of the Board of Trustees of the University of Florida Law Center Association, Inc. from 2016 to 2021,
as a member of its Audit Committee from 2016 to 2020, and as a member of its Membership Committee from 2020
to 2021.
Ms. Krentzman served from 1997 to 2004 and from 2007 and 2014 in various capacities
at Deloitte & Touche LLP, including Principal and Chief Regulatory Advisor for Asset Management
Services, U.S. Mutual Fund Leader and National Director of the Investment Management Regulatory Consulting
Practice. She served as General Counsel of the Investment Company Institute from 2004 to 2007.
From 1996 to 1997, Ms. Krentzman served as an Assistant Director of the Division of
Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities
and Exchange Commission. She also served from 1991 to 1996 in various positions with the Division
of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission and from 1987 to 1991 as an Associate at Ropes & Gray LLP.
The Board believes that Ms. Krentzman’s legal background, experience in financial services and accounting and as a director of other investment companies benefits the Funds.
Anthony J. LaCava, Jr., Trustee
Anthony J. LaCava, Jr. has been a member of the Board of Trustees of the Invesco Funds
since 2019.
Previously, Mr. LaCava served as a member of the board of directors and as a member
of the audit committee of Blue Hills Bank, a publicly traded financial institution.
Mr. LaCava retired after a 37-year career with KPMG LLP (“KPMG”) where he served as senior partner for a wide range of firm clients across the retail, financial services, consumer markets,
real estate, manufacturing, health care and technology industries. From 2005 to 2013, Mr. LaCava
served as a member of the board of directors of KPMG and chair of the board’s audit and finance committee and nominating committee. He also previously served as Regional Managing Partner from 2009 through
2012 and Managing Partner of KPMG’s New England practice.
Mr. LaCava currently serves as Member and Chairman of the Business School Advisory
Council of Bentley University and as a member of American College of Corporate Directors and
Board Leaders, Inc.
The Board believes that Mr. LaCava’s experience in audit and financial services benefits the Funds.
James “Jim” Liddy, Trustee
James “Jim” Liddy has been a member of the Board of Trustees of the Invesco Funds since 2024. Mr. Liddy is a Retired Partner of KPMG LLP (KPMG) and previously served as Chairman of KPMG’s Global Financial Services, Americas practice from 2017 through 2021. He also led KPMG’s U.S. Financial Services practice from 2015 through 2021.
Prior to assuming his most recent role in 2017, Mr. Liddy served as Vice Chair of
Audit and on various other committees at KPMG. He also previously served as National Managing Partner of
Audit and was a member of the firm’s Global Audit Steering Group.
The Board believes that Mr. Liddy’s audit experience and knowledge of financial services and investment management benefits the Funds.
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Dr. Prema Mathai-Davis, Trustee
Dr. Prema Mathai-Davis has been a member of the Board of Trustees of the Invesco Funds
since 1998.
Since 2021, Dr. Mathai-Davis has served as a member of the Board of Positive Planet
US, a non-profit organization and Healthcare Chaplaincy Network, a non-profit organization.
Previously, Dr. Mathai-Davis served as co-founder and partner of Quantalytics Research,
LLC, (a FinTech Investment Research Platform) from 2017 to 2019, when the firm was acquired by Forbes Media Holdings, LLC.
Dr. Mathai-Davis previously served as Chief Executive Officer of the YWCA of the USA
from 1994 until her retirement in 2000. Prior to joining the YWCA, Dr. Mathai-Davis served as the
Commissioner of the New York City Department for the Aging. She was a Commissioner and Board Member of the
Metropolitan Transportation Authority of New York, the largest regional transportation network
in the U.S. Dr. Mathai-Davis also served as a Trustee of the YWCA Retirement Fund, the first and oldest pension
fund for women, and on the advisory board of the Johns Hopkins Bioethics Institute. She was a member of the
Board of Visitors of the University of Maryland School of Public Policy, and on the visiting Committee of The
Harvard University Graduate School of Education.
Dr. Mathai-Davis was the president and chief executive officer of the Community Agency
for Senior Citizens, a non-profit social service agency that she established in 1981. She also
directed the Mt. Sinai School of Medicine-Hunter College Long-Term Care Gerontology Center, one of the first
of its kind.
The Board believes that Dr. Mathai-Davis’ extensive experience in running public and charitable institutions benefits the Funds.
Joel W. Motley, Trustee
Joel W. Motley has been a member of the Board of Trustees of the Invesco Funds since
2019. From 2002 to 2019, Mr. Motley served on the boards of certain investment companies in the Oppenheimer
Funds complex.
In May 2022, Mr. Motley rejoined the Vestry and the Investment Committee of Trinity
Church Wall Street. Since 2021, Mr. Motley has served as a Board member of the Trust for Mutual Understanding,
which makes grants to arts and environmental organizations in Eastern Europe. Since 2021, Mr.
Motley has served as a member of the board of Blue Ocean Acquisition Corp. Since 2016, Mr. Motley has served
as an independent director of the Office of Finance of the Federal Home Loan Bank System. He has served
as Managing Director of Carmona Motley, Inc., a privately-held financial advisory firm, since
2002.
Mr. Motley also serves as a member of the Council on Foreign Relations and its Finance
and Budget Committee. He is a member of the Investment Committee and is Chairman Emeritus of
the Board of Human Rights Watch and a member of the Investment Committee and the Board of Historic Hudson
Valley, a non-profit cultural organization.
Since 2011, he has served as a Board Member and Investment Committee Member of the
Pulitzer Center for Crisis Reporting, a non-profit journalism organization. Mr. Motley also serves
as Director and member of the Board and Investment Committee of The Greenwall Foundation, a bioethics research
foundation, and as a Director of Friends of the LRC, a South Africa legal services foundation.
Previously, Mr. Motley served as Managing Director of Public Capital Advisors, LLC,
a privately held financial advisory firm, from 2006 to 2017. He also served as Managing Director of
Carmona Motley Hoffman Inc. a privately-held financial advisor, and served as a Director of Columbia Equity
Financial Corp., a privately-held financial advisor, from 2002 to 2007.
The Board believes that Mr. Motley’s experience in financial services and as a director of other investment companies benefits the Funds.
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Teresa M. Ressel, Trustee
Teresa Ressel has been a member of the Board of Trustees of the Invesco Funds since
2017.
Ms. Ressel has previously served within the private sector and the U.S. government
as well as consulting. Formerly, Ms. Ressel served at UBS AG in various capacities, including as Chief Executive
Officer of UBS Securities LLC, a broker-dealer division of UBS Investment Bank, and as Group Chief
Operating Officer of the Americas.
Between 2001 and 2004, Ms. Ressel served at the U.S. Treasury, initially as Deputy
Assistant Secretary for Management & Budget and then as Assistant Secretary for Management and Chief Financial
Officer. Ms. Ressel was confirmed by the U.S. Senate and anchored financial duties at the Department,
including finance, accounting, risk, audit and performance measurement.
Ms. Ressel also volunteers within her community across a number of functions and serves
on the board of GAVI, the Global Vaccine Alliance (non-profit) supporting children’s health.
The Board believes that Ms. Ressel’s risk management and financial experience in both the private and public sectors benefits the Funds.
Robert C. Troccoli, Trustee
Robert C. Troccoli has been a member of the Board of Trustees of the Invesco Funds
since 2016.
Mr. Troccoli retired after a 39-year career with KPMG LLP (“KPMG”), where he served as a senior Partner. From 2013 to 2017, he was an adjunct professor at the University of Denver’s Daniels College of Business.
Mr. Troccoli’s leadership roles during his career with KPMG included managing partner and partner in charge of the Denver office’s Financial Services Practice. He served regulated investment companies, investment advisors, private partnerships, private equity funds, sovereign wealth
funds, and financial services companies. Toward the end of his career, Mr. Troccoli was a founding member of KPMG’s Private Equity Group in New York City, where he served private equity firms and sovereign wealth
funds. Mr. Troccoli also served mutual fund clients along with several large private equity firms as Global Lead Partner of KPMG’s Private Equity Group.
The Board believes that Mr. Troccoli’s experience as a partner in a large accounting firm and his knowledge of investment companies, investment advisors, and private equity firms benefits
the Funds.
Daniel S. Vandivort, Trustee
Daniel S. Vandivort has been a member of the Board of Trustees of the Invesco Funds
since 2019. From 2014 to 2019, Mr. Vandivort served on the boards of certain investment companies in
the Oppenheimer Funds complex, as a Trustee and as the Governance Committee Chair.
Mr. Vandivort also served as Chairman, Lead Independent Director, and Chairman of
the Audit Committee of the Board of Directors of the Value Line Funds from 2008 through 2014.
Previously, Mr. Vandivort also served as a Trustee and Chairman of the Weiss Peck
and Greer Mutual Funds Board from 2004 to 2005.
Previously, Mr. Vandivort served at Weiss Peck and Greer/Robeco Investment Management
from 1994 to 2007, as President and Chief Investment Officer and prior to that as Managing Director
and Head of Fixed Income. Mr. Vandivort also served in various capacities at CS First Boston from 1984
to 1994, including as Head of Fixed Income at CS First Boston Investment Management.
Mr. Vandivort was also a Trustee on the Board of Huntington Disease Foundation of
America from 2007 to 2013 and from 2015 to 2019. He also served as Treasurer and Chairman of the Audit
and Finance Committee of Huntington Disease Foundation of America from 2016 to 2019.
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Mr. Vandivort currently serves as President of Flyway Advisory Services LLC, a consulting
and property management company. He is also a Member of the Investment Committee for the Historic Charleston Foundation.
The Board believes that Mr. Vandivort’s experience in financial services and investment management and as a director of other investment companies benefits the Funds.
Management Information
The Trustees have the authority to take all actions that they consider necessary or
appropriate in connection with oversight of the Trust, including, among other things, approving the
investment objectives, investment policies and fundamental investment restrictions for the Funds. The Trust
has entered into agreements with various service providers, including the Funds’ investment advisers, administrator, transfer agent, distributor and custodians, to conduct the day-to-day operations of the Funds.
The Trustees are responsible for selecting these service providers, approving the terms of their contracts
with the Funds, and exercising general oversight of these arrangements on an ongoing basis.
Certain Trustees and officers of the Trust are affiliated with Invesco and Invesco
Ltd., the parent corporation of Invesco. All of the Trust’s executive officers hold similar offices with some or all of the other Trusts.
Leadership Structure and the Board of Trustees. The Board is currently composed of fourteen Trustees, including twelve Trustees who are not “interested persons” of the Funds, as that term is defined in the 1940 Act (collectively, the Independent Trustees and each, an Independent Trustee). In
addition to eight regularly scheduled meetings per year, the Board holds special meetings or informal conference
calls to discuss specific matters that may require action prior to the next regular meeting. As discussed
below, the Board has established four standing committees – the Audit Committee, the Compliance Committee, the Governance Committee and the Investments Committee (the Committees), to assist the Board in performing
its oversight responsibilities.
The Board has appointed an Independent Trustee to serve in the role of Chair. The Chair’s primary role is to preside at meetings of the Board and act as a liaison with the Adviser and other
service providers, officers, attorneys, and other Trustees between meetings. The Chair also participates in the
preparation of the agenda for the meetings of the Board, is active with mutual fund industry organizations,
and may perform such other functions as may be requested by the Board from time to time. Except for any duties
specified pursuant to the Trust’s Declaration of Trust or By-laws, the designation of Chair does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations
or liability imposed on such person as a member of the Board generally.
The Board believes that its leadership structure, including having an Independent
Trustee as Chair, allows for effective communication between the Trustees and management, among the Trustees
and among the Independent Trustees. The existing Board structure, including its Committee structure,
provides the Independent Trustees with effective control over Board governance while also allowing
them to receive and benefit from insight from the interested Trustee who is an active officer of the Funds’ investment adviser. The Board’s leadership structure promotes dialogue and debate, which the Board believes allows for the proper consideration of matters deemed important to the Funds and their shareholders and
results in effective decision-making.
Risk Oversight. The Board considers risk management issues as part of its general oversight responsibilities throughout the year at its regular meetings and at regular meetings
of its Committees. Invesco prepares regular reports that address certain investment, valuation and compliance
matters, and the Board as a whole or the Committees also receive special written reports or presentations on
a variety of risk issues at the request of the Board, a Committee or the Senior Officer.
The Board also considers liquidity risk management issues as part of its general oversight
responsibilities and oversees the Trust's liquidity risk through, among other things, receiving periodic
reporting and presentations by Invesco personnel that address liquidity matters. As required by
Rule 22e-4 under the 1940
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Act, the Board, including a majority of the Independent Trustees, has approved the Trust’s Liquidity Risk Management ("LRM") Program, which is reasonably designed to assess and manage the Trust’s liquidity risk, and has appointed the LRM Program Administrator that is responsible for administering
the LRM Program. The Board also reviews, no less frequently than annually, a written report prepared
by the LRM Program Administrator that addresses, among other items, the operation of the program and
assesses its adequacy and effectiveness of implementation. The Board also oversees risks related to certain Funds’ use of derivatives as part of its general oversight responsibilities. The Board has approved
a derivatives risk manager, which is responsible for administering the derivatives risk management program (“DRM Program”) for the Funds that are required to implement a DRM Program. The Board meets with the
derivatives risk manager on a periodic basis, including receiving quarterly and annual reports from
the derivatives risk manager, to review the implementation of the DRM Program.
The Audit Committee assists the Board with its oversight of the Funds' accounting
and auditing process. The Audit Committee is responsible for selecting the Funds' independent registered
public accounting firm (auditors), including evaluating their independence and meeting with such auditors
to consider and review matters relating to the Funds' financial reports and internal controls. In addition,
the Audit Committee meets regularly with representatives of Invesco Ltd.’s internal audit group to review reports on their examinations of functions and processes within Invesco that affect the Funds. The Audit Committee
also oversees the Adviser’s process for valuing the Funds’ portfolio investments and receives reports from management regarding its process and the valuation of the Funds’ portfolio investments as consistent with the valuation policy approved by the Board and related procedures.
The Compliance Committee receives regular compliance reports prepared by Invesco’s compliance group and meets regularly with the Fund’s Chief Compliance Officer (CCO) to discuss compliance issues, including compliance risks. The Compliance Committee has recommended and the Board has adopted
compliance policies and procedures for the Funds and for the Funds’ service providers. The compliance policies and procedures are designed to detect, prevent and correct violations of the federal securities
laws.
The Governance Committee monitors the composition of the Board and each of its Committees
and monitors the qualifications of the Trustees to ensure adherence to certain governance
undertakings applicable to the Funds. In addition, the Governance Committee oversees an annual self-assessment
of the Board and its committees and addresses governance risks, including insurance and fidelity bond
matters, for the Trust.
The Investments Committee and its sub-committees receive regular written reports describing
and analyzing the investment performance of the Invesco Funds. In addition, Invesco’s Chief Investment Officers and the portfolio managers of the Funds meet regularly with the Investments Committee
or its sub-committees to discuss portfolio performance, including investment risk, such as the impact on
the Funds of investments in particular types of securities or instruments, such as derivatives. To the extent
that a Fund changes a particular investment strategy that could have a material impact on the Fund’s risk profile, the Board generally is consulted in advance with respect to such change.
Committee Structure
The members of the Audit Committee are Messrs. LaCava (Chair), Liddy and Troccoli, Dr. Jones, and Mss. Hostetler and Ressel. The Audit Committee performs a number of functions with
respect to the oversight of the Funds’ accounting and financial reporting, including: (i) assisting the Board with its oversight of the qualifications, independence and performance of the independent registered public
accountants; (ii) selecting independent registered public accountants for the Funds; (iii) to the extent required,
pre-approving certain audit and permissible non-audit services; (iv) overseeing the financial reporting
process for the Funds; (v) assisting the Board with its oversight of the integrity of the Funds’ financial statements and compliance with legal and regulatory requirements that relate to the Funds’ accounting and financial reporting, internal control over financial reporting and independent audits; (vi) pre-approving engagements for
non-audit services to be provided by the Funds’ independent auditors to the Funds’ investment adviser or to any of its affiliates; and (vii) overseeing the performance of the fair valuation determinations by the Adviser.
During the fiscal year ended February 29, 2024, the Audit Committee held four meetings.
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The members of the Compliance Committee are Messrs. Motley and Vandivort, and Mss.
Brown, Deckbar and Krentzman (Chair) and Dr. Mathai-Davis. The Compliance Committee performs a number
of functions with respect to compliance matters, including: (i) reviewing and making recommendations
concerning the qualifications, performance and compensation of the Funds’ Chief Compliance Officer; (ii) reviewing recommendations and reports made by the Chief Compliance Officer of the Funds regarding
compliance matters; (iii) overseeing compliance policies and procedures of the Funds and their
service providers; (iv) overseeing potential conflicts of interest that are reported to the Compliance Committee
by Invesco, the Chief Compliance Officer or other independent advisors; (v) reviewing reports prepared by a third party’s compliance review of Invesco; (vi) if requested by the Board, overseeing risk management
with respect to the Funds (other than risks overseen by the other Committees), including receiving and
overseeing risk management reports from Invesco that are applicable to the Funds and their service
providers; and (vii) reviewing reports by Invesco on correspondence with regulators or governmental agencies
with respect to the Funds and recommending to the Board what action, if any, should be taken by the Funds
in light of such reports. During the fiscal year ended February 29, 2024, the Compliance Committee held four meetings.
The members of the Governance Committee are Messrs. Motley and Vandivort (Chair) and
Mss. Brown and Hostetler and Dr. Mathai-Davis. The Governance Committee performs a number of
functions with respect to governance, including: (i) nominating persons to serve as Independent Trustees
and as members of each Committee, and nominating the Chair of the Board, the Chair of each Committee and
the Chair of each Sub-Committee of the Investments committee; (ii) reviewing and making recommendations to the full
Board regarding the size and composition of the Board and the compensation payable to the
Independent Trustees;(iii) overseeing the annual evaluation of the performance of the Board and
its Committees; (iv) considering and overseeing the selection of independent legal counsel to the Independent
Trustees; (v) considering and overseeing the selection and engagement of a Senior Officer if and
as they deem appropriate, including compensation and scope of services, and recommending all such
matters to the Board or the independent trustees as appropriate; (vi) reviewing administrative and/or logistical
matters pertaining to the operations of the Board; and (vii) reviewing annually recommendations from Invesco
regarding amounts and coverage of primary and excess directors and officers/errors and omissions liability
insurance and allocation of premiums. During the fiscal year ended February 29, 2024, the Governance Committee held nine meetings.
The Governance Committee will consider nominees recommended by a shareholder to serve
as trustees, provided: (i) that such submitting shareholder provides the information required by,
and otherwise complies with the applicable provisions of, the Fund’s governing instruments, (ii) that such submitting shareholder is a shareholder of record at the time he or she submits such names and is entitled to
vote at the meeting of shareholders at which trustees will be elected; and (iii) that the Governance Committee
or the Board, as applicable, shall make the final determination of persons to be nominated. Notice
procedures set forth in the Trust’s bylaws require that any shareholder of a Fund desiring to nominate a candidate for election at a shareholder meeting must provide certain information about itself and the candidate,
and must submit to the Trust’s Secretary the nomination in writing not later than the close of business on the later of the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60 days from such anniversary date or if the
Trust has not previously held an annual meeting, notice by the Shareholder to be timely must be so delivered
not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close
of business on the later of the 90th day prior to such annual meeting or the tenth day following the
day on which public announcement of the date of such meeting is first made by the Trust.
The members of the Investments Committee are Messrs. LaCava, Liddy, Motley (Sub-Committee Chair), Troccoli (Sub-Committee Chair) and Vandivort, Mss. Brown, Deckbar, Hostetler (Chair), Krentzman and Ressel and Drs. Jones and Mathai-Davis (Sub-Committee Chair). The Investments Committee’s primary purposes are to assist the Board in its oversight of the investment management services
provided by Invesco and the Sub-Advisers and to periodically review Fund performance information, and
information regarding the investment personnel and other resources devoted to the management of the Funds and
make
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recommendations to the Board, when applicable. During the fiscal year ended February
29, 2024, the Investments Committee held four meetings.
The Investments Committee has established three Sub-Committees and delegated to the
Sub-Committees responsibility for, among other matters: (i) reviewing the performance of the Invesco
Funds that have been assigned to a particular Sub-Committee (for each Sub-Committee, the Designated
Funds), except to the extent the Investments Committee takes such action directly; (ii) reviewing
with the applicable portfolio managers from time to time the investment objective(s), policies, strategies, performance
and risks and other investment-related matters of the Designated Funds; and (iii) being generally familiar
with the investment objectives and principal investment strategies of the Designated Funds.
Trustee Ownership of Fund Shares
The dollar range of equity securities beneficially owned by each trustee (i) in the
Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustee within
the Invesco Funds complex, is set forth in Appendix C.
Compensation
Each Trustee who is not affiliated with Invesco is compensated for his or her services
according to a fee schedule that recognizes the fact that such Trustee also serves as a Trustee of other
Invesco Funds. Each such Trustee receives a fee, allocated among the Invesco Funds for which he or she
serves as a Trustee that consists of an annual retainer component and a meeting fee component. The Chair of
the Board and of each Committee and Sub-Committee receive additional compensation for their services.
Information regarding compensation paid or accrued for each Trustee of the Trust who
was not affiliated with Invesco during the year ended December 31, 2023 is found in Appendix D.
Retirement Policy
The Trustees have adopted a retirement policy that permits each Trustee to serve until
December 31 of the year in which the Trustee turns 75.
Pre-Amendment Retirement Plan For Trustees
The Trustees have adopted a Retirement Plan for the Trustees who are not affiliated
with the Adviser. A description of the pre-amendment Retirement Plan follows. Annual retirement benefits
are available from the Funds and/or the other Invesco Funds for which a Trustee serves (each, a Covered Fund),
for each Trustee who is not an employee or officer of the Adviser, who either (a) became a Trustee
prior to December 1, 2008, and who has at least five years of credited service as a Trustee (including service
to a predecessor fund) of a Covered Fund, or (b) was a member of the Board of Trustees of a Van Kampen Fund immediately
prior to June 1, 2010 (Former Van Kampen Trustee), and has at least one year of credited service
as a Trustee of a Covered Fund after June 1, 2010.
For Trustees other than Former Van Kampen Trustees, effective January 1, 2006, for
retirements after December 31, 2005, the retirement benefits will equal 75% of the Trustee’s annual retainer paid to or accrued by any Covered Fund with respect to such Trustee during the twelve-month period prior
to retirement, including the amount of any retainer deferred under a separate deferred compensation
agreement between the Covered Fund and the Trustee. The amount of the annual retirement benefit does
not include additional compensation paid for Board meeting fees or compensation paid to the Chair of the
Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to
the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for a number of
years equal to the lesser of (i) sixteen years or (ii) the number of such Trustee’s credited years of service. If a Trustee dies prior to receiving the full amount of retirement benefits, the remaining payments will be made
to the deceased Trustee’s designated beneficiary for the same length of time that the Trustee would have received the payments based on his or her service or, if the Trustee has elected, in a discounted
lump sum payment. A Trustee must have attained the age of 65 (60 in the event of disability) to receive
any retirement benefit. A
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Trustee may make an irrevocable election to commence payment of retirement benefits
upon retirement from the Board before age 72; in such a case, the annual retirement benefit is subject
to a reduction for early payment.
If the Former Van Kampen Trustee completes at least 10 years of credited service after
June 1, 2010, the retirement benefit will equal 75% of the Former Van Kampen Trustee’s annual retainer paid to or accrued by any Covered Fund with respect to such Trustee during the twelve-month period prior
to retirement, including the amount of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and such Trustee. The amount of the annual retirement benefit does not
include additional compensation paid for Board meeting fees or compensation paid to the Chair of the
Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to
the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for 10 years beginning
after the later of the Former Van Kampen Trustee’s termination of service or attainment of age 72 (or age 60 in the event of disability or immediately in the event of death). If a Former Van Kampen Trustee dies
prior to receiving the full amount of retirement benefits, the remaining payments will be made to the deceased Trustee’s designated beneficiary or, if the Trustee has elected, in a discounted lump sum payment.
If the Former Van Kampen Trustee completes less than 10 years of credited service
after June 1, 2010, the retirement benefit will be payable at the applicable time described in the preceding
paragraph, but will be paid in two components successively. For the period of time equal to the Former Van Kampen Trustee’s years of credited service after June 1, 2010, the first component of the annual retirement
benefit will equal 75% of the compensation amount described in the preceding paragraph. Thereafter, for the
period of time equal to the Former Van Kampen Trustee’s years of credited service after June 1, 2010, the second component of the annual retirement benefit will equal the excess of (x) 75% of the compensation amount
described in the preceding paragraph, over (y) $68,041 plus an interest factor of 4% per year compounded
annually measured from June 1, 2010 through the first day of each year for which payments under this
second component are to be made. In no event, however, will the retirement benefits under the two components
be made for a period of time greater than 10 years. For example, if the Former Van Kampen Trustee completes
7 years of credited service after June 1, 2010, he or she will receive 7 years of payments under the first
component and thereafter 3 years of payments under the second component, and if the Former Van Kampen
Trustee completes 4 years of credited service after June 1, 2010, he or she will receive 4
years of payments under the first component and thereafter 4 years of payments under the second component.
Amendment of Retirement Plan and Conversion to Defined Contribution Plan
The Trustees approved an amendment to the Retirement Plan to convert it to a defined
contribution plan for active Trustees (the Amended Plan). Under the Amended Plan, the benefit amount
was amended for each active Trustee to the present value of the Trustee’s existing retirement plan benefit as of December 31, 2013 (the Existing Plan Benefit) plus the present value of retirement benefits expected
to be earned under the Retirement Plan through the end of the calendar year in which the Trustee attained
age 75 (the Expected Future Benefit and, together with the Existing Plan Benefit, the Accrued Benefit).
On the conversion date, the Covered Funds established bookkeeping accounts in the amount of their pro rata share
of the Accrued Benefit, which is deemed to be invested in one or more Invesco Funds selected by the
participating Trustees. Such accounts will be adjusted from time to time to reflect deemed investment earnings
and losses. Each Trustee’s Accrued Benefit is not funded and, with respect to the payments of amounts held in the accounts, the participating Trustees have the status of unsecured creditors of the Covered Funds.
Trustees will be paid the adjusted account balance under the Amended Plan in quarterly installments for
the same period as described above.
Deferred Compensation Agreements
Certain former Trustees and current Independent Trustees (for purposes of this paragraph only, the Deferring Trustees) have executed a Deferred Compensation Agreement (collectively, the Compensation Agreements). Pursuant to the Compensation Agreements, the Deferring Trustees have
the option to elect to defer receipt of up to 100% of their compensation payable by the Funds, and such amounts
are placed into a
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deferral account and deemed to be invested in one or more Invesco Funds selected by
the Deferring Trustees. Amounts deferred by Deferring Trustees pursuant to a Compensation Agreement during
the most recent fiscal year are shown in Appendix D – Trustee Compensation Table.
Distributions from these deferral accounts will be paid in cash, generally in equal
quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning
on the date selected under the Compensation Agreement. If a Deferring Trustee dies prior to the
distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed
to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments
of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured
creditors of the Funds and of each other Invesco Fund from which they are deferring compensation.
Code of Ethics
Invesco, the Trust, Invesco Distributors and certain of the Sub-Advisers each have
adopted a Code of Ethics that applies to all Invesco Fund trustees and officers, and employees of Invesco,
the Sub-Advisers and their affiliates, and governs, among other things, the personal trading activities
of all such persons. Certain Sub-Advisers have adopted their own Code of Ethics. Each Code of Ethics is designed
to detect and prevent improper personal trading by portfolio managers and certain other employees that could
compete with or take advantage of the Fund’s portfolio transactions. Unless specifically noted, to the extent a Sub-Adviser has adopted its own Code of Ethics, each Sub-Adviser’s Code of Ethics does not materially differ from Invesco’s Code of Ethics discussed below. The Code of Ethics is intended to address conflicts
of interest with the Trust that may arise from personal trading in the Invesco Funds. Personal trading, including
personal trading involving securities that may be purchased or held by an Invesco Fund, is permitted
under the Code of Ethics subject to certain restrictions; however, employees are required to pre-clear security
transactions with the Compliance Officer or a designee and to report transactions on a regular basis.
Proxy Voting Policies
Invesco has adopted its own specific Proxy Voting Policies.
The Board has delegated responsibility for decisions regarding proxy voting for securities
held by the Fund to Invesco Advisers, Inc.
Invesco (the Proxy Voting Entity) will vote such proxies in accordance with its proxy
voting policies and procedures, as outlined above, which have been reviewed and approved by the Board,
and which are found in Appendix E. Any material changes to the proxy voting policies and procedures will
be submitted to the Board for approval. The Board will be supplied with a summary quarterly report of the Fund’s proxy voting record. Information regarding how the Fund voted proxies related to its portfolio
securities during the twelve months ended June 30, will be available without charge at our website, http://www.invesco.com/us. This information will also be available at the SEC website, http://www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Invesco provided the initial capitalization of the Fund and, accordingly, as of the
date of this SAI, owned more than 25% of the issued and outstanding shares of the Fund and therefore could be deemed to “control” the Fund as that term is defined in the 1940 Act. Future shareholders with a controlling interest in the Fund could affect the outcome of voting or the direction of management of the Fund. The
Fund has no 5% shareholders. Invesco is located at 1331 Spring Street, N.W., Suite 2500, Atlanta, Georgia 30309.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Invesco serves as the Fund's investment adviser. The Adviser manages the investment
operations of the Fund as well as other investment portfolios that encompass a broad range of investment
objectives, and has agreed to perform or arrange for the performance of the Fund's day-to-day management.
The Adviser, as
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successor in interest to multiple investment advisers, has been an investment adviser
since 1976. Invesco Advisers, Inc. is an indirect, wholly-owned subsidiary of Invesco Ltd. Invesco Ltd.
and its subsidiaries are an independent global investment management group. Certain of the directors and officers
of Invesco are also executive officers of the Trust and their affiliations are shown under “Management Information” herein.
As investment adviser, Invesco supervises all aspects of the Fund's operations and
provides investment advisory services to the Fund. Invesco obtains and evaluates economic, statistical
and financial information to formulate and implement investment programs for the Fund. The Master Investment Advisory
Agreement (Advisory Agreement) provides that, in fulfilling its responsibilities, Invesco may
engage the services of other investment managers with respect to the Fund. The investment advisory services of
Invesco are not exclusive and Invesco is free to render investment advisory services to others, including other
investment companies.
Pursuant to an administrative services agreement with the Fund, Invesco is also responsible
for furnishing to the Fund, at Invesco’s expense, the services of persons believed to be competent to perform all supervisory and administrative services required by the Fund, which in the judgment
of the trustees, are necessary to conduct the business of the Fund effectively, as well as the offices,
equipment and other facilities necessary for its operations. Such functions include the maintenance of the Fund’s accounts and records, and the preparation of all requisite corporate documents such as tax returns
and reports to the SEC and shareholders.
The Advisory Agreement provides that the Fund will pay or cause to be paid all expenses
of the Fund not assumed by Invesco, including, without limitation: brokerage commissions, taxes, legal,
auditing or governmental fees, custodian, transfer and shareholder service agent costs, expenses
of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares
for sale, expenses relating to trustee and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of the Fund
in connection with membership in investment company organizations, and the cost of printing copies of
prospectuses and statements of additional information distributed to the Fund's shareholders.
Invesco, at its own expense, furnishes to the Trust office space and facilities. Invesco
furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of
shares.
Invesco does not receive a fee from the Fund for providing investment advisory services
pursuant to its Advisory Agreement with the Trust. Invesco or its affiliates typically receives a
fee from the separately managed account client or the separately managed account program sponsor for providing
management or advisory services to the separately managed account, including with respect to assets
that may be invested in the Fund.
Invesco has contractually agreed to reimburse expenses to the extent necessary to
limit the total annual fund operating expenses (excluding (i) interest; (ii) taxes; (iii) dividend expenses
on short sales; (iv) extraordinary or non-routine items, including litigation expenses; and (v) expenses
that the Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable) to 0.00% of the Fund’s average daily net assets.
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 Fund’s expense limit.
If applicable, such expense reduction is set forth in the Fee Table to the Fund’s Prospectus. The expense limitation agreement will continue in effect for so long as Invesco serves as investment
adviser to the Fund. The fee waiver agreement cannot be terminated or amended to increase the expense limit
without approval of the Board.
The management fees are found in Appendix F.
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Investment Sub-Advisers
Invesco has entered into a Sub-Advisory Agreement with certain affiliates to serve
as sub-advisers to the Fund (each, a Sub-Adviser), pursuant to which these affiliated sub-advisers may be
appointed by Invesco from time to time to provide discretionary investment management services, investment
advice, and/or order execution services to the Fund. These affiliated sub-advisers, each of which is a
registered investment adviser under the Advisers Act are:
●
Invesco Asset Management (India) Private Limited (Invesco India)
●
Invesco Asset Management (Japan) Limited (Invesco Japan)
●
Invesco Asset Management Deutschland GmbH (Invesco Deutschland)
●
Invesco Asset Management Limited (Invesco Asset Management)
●
Invesco Canada Ltd. (Invesco Canada)
●
Invesco Capital Management LLC (Invesco Capital)
●
Invesco Hong Kong Limited (Invesco Hong Kong)
●
Invesco Senior Secured Management, Inc. (Invesco Senior Secured)
The only fees payable to the Sub-Advisers described above under the Sub-Advisory Agreements
are for providing discretionary investment management services. For such services, Invesco
will pay each Sub-Adviser a fee, computed daily and paid monthly, equal to (i) 40% of the monthly compensation
that Invesco receives from the Trust, multiplied by (ii) the fraction equal to the net assets of
such Fund as to which such Sub-Adviser shall have provided discretionary investment management services for that
month divided by the net assets of such Fund for that month. Pursuant to the Sub-Advisory Agreement, this
fee is reduced to reflect contractual or voluntary fee waivers or expense limitations by Invesco, if any, in
effect from time to time. In no event shall the aggregate monthly fees paid to the Sub-Advisers under the Sub-Advisory
Agreement exceed 40% of the monthly compensation that Invesco receives from the Trust pursuant to its
advisory agreement with the Trust, as reduced to reflect contractual or voluntary fee waivers or expense
limitations by Invesco, if any.
Because Invesco does not receive a fee from the Fund for providing investment advisory
services pursuant to its Advisory Agreement with the Trust, the Sub-Advisers will not receive
compensation for providing investment management services to the Fund.
Invesco and each Sub-Adviser are indirect wholly-owned subsidiaries of Invesco Ltd.
Service Agreements
Administrative Services Agreement. Invesco and the Trust have entered into a Master Administrative Services Agreement (Administrative Services Agreement) pursuant to which Invesco may
perform or arrange for the provision of certain accounting and other administrative services to the Fund
which are not required to be performed by Invesco under the Advisory Agreement. The Administrative Services
Agreement provides that it will remain in effect and continue from year to year only if such continuance
is specifically approved at least annually by the Board, including the independent trustees. Under the Administrative
Services Agreement, Invesco is entitled to receive from the Fund reimbursement of its costs
or such reasonable compensation. Currently, Invesco is reimbursed for the services of the Trust’s principal financial officer and the principal financial officer's staff and any expenses related to fund accounting services.
Administrative services fees paid to Invesco by the Fund for the last three fiscal
years or periods, as applicable, ended February 28 or 29 are found in Appendix H.
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Other Service Providers
Transfer Agent. Invesco Investment Services, Inc., (Invesco Investment Services), 11 Greenway Plaza,
Suite 1000, Houston, Texas 77046-1173, a wholly-owned subsidiary of Invesco Ltd., is the Trust’s transfer agent.
The Amended and Restated Transfer Agency and Service Agreement (the TA Agreement)
between the Trust and Invesco Investment Services provides that Invesco Investment Services will
perform certain services related to the servicing of shareholders of the Fund. Other such services
may be delegated or sub- contracted to third party intermediaries. For servicing accounts holding shares of
the fund, the TA Agreement provides that the Trust, on behalf of the Invesco Funds, will pay Invesco Investment
Services an annual fee per open shareholder account. This fee is paid monthly at the rate of 1/12 of the
annual rate and is based upon the number of open shareholder accounts during each month. For servicing accounts
holding shares of the Fund, the TA Agreement provides that the Trust, on behalf of the Fund, will pay
Invesco Investment Services an asset-based fee. The TA Agreement also provides that Invesco Investment
Services is responsible for out-of-pocket expenses relating to
the procurement of goods and services as they relate to its obligations under the TA Agreement. In addition, all fees payable by Invesco Investment Services or its affiliates to third party intermediaries who service accounts pursuant to sub-transfer agency, omnibus account services and sub- accounting agreements are charged back to the Invesco Funds, subject to certain limitations approved by the Board of the Trust as reflected in Board-approved policies. These payments are made in consideration of services that would otherwise be provided by Invesco Investment Services if the accounts serviced by such intermediaries were serviced by Invesco Investment Services directly. For more information regarding such payments to intermediaries, see the discussion under “Payments to Sponsors” found in Appendix K.
the procurement of goods and services as they relate to its obligations under the TA Agreement. In addition, all fees payable by Invesco Investment Services or its affiliates to third party intermediaries who service accounts pursuant to sub-transfer agency, omnibus account services and sub- accounting agreements are charged back to the Invesco Funds, subject to certain limitations approved by the Board of the Trust as reflected in Board-approved policies. These payments are made in consideration of services that would otherwise be provided by Invesco Investment Services if the accounts serviced by such intermediaries were serviced by Invesco Investment Services directly. For more information regarding such payments to intermediaries, see the discussion under “Payments to Sponsors” found in Appendix K.
Sub-Transfer Agent. Invesco Canada, 120 Bloor Street East, Suite 700, Toronto, Ontario, Canada M4W 1B7, a wholly-owned, indirect subsidiary of Invesco Ltd., provides services to the
Trust as a sub-transfer agent, pursuant to an agreement between Invesco Canada and Invesco Investment Services.
The Trust does not pay a fee to Invesco Canada for these services. Rather Invesco Canada is compensated
by Invesco Investment Services, as a sub-contractor.
In addition, Invesco (India) Private Limited, Divyasree Orion, B6 15TH FLOOR, Raidurgam,
Serilingampalli, Hyderabad, India K7 500032, a wholly-owned, indirect subsidiary of
Invesco Ltd., provides services to the Trust as a sub-transfer agent, pursuant to an agreement between Invesco
(India) Private Limited and Invesco Investment Services. The Trust does not pay a fee to Invesco (India)
Private Limited and Invesco Investment Services. Rather Invesco (India) Private Limited is compensated
by Invesco Investment Services, as a sub-contractor.
Custodian
State Street Bank and Trust Company (the Custodian), 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of all securities and cash of the Fund. The Bank of New York Mellon,
2 Hanson Place, Brooklyn, New York 11217-1431, also serves as sub-custodian to facilitate cash management.
The Custodian and sub-custodian are authorized to establish separate accounts in foreign
countries and to cause foreign securities owned by the Fund to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and
securities depositories. Invesco is responsible for selecting eligible foreign securities depositories and
for assessing the risks associated with investing in foreign countries, including the risk of using eligible foreign securities’ depositories in a country. The Custodian is responsible for monitoring eligible foreign securities
depositories.
Under its contract with the Trust, the Custodian maintains the portfolio securities
of the Fund, administers the purchases and sales of portfolio securities, collects interest and dividends and
other distributions made on the securities held in the portfolios of the Fund and performs other ministerial duties.
These services do not include any supervisory function over management or provide any protection against
any possible depreciation of assets.
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Independent Registered Public Accounting Firm. The Fund's independent registered public accounting firm is responsible for auditing the financial statements of the Fund.
The Audit Committee of the Board has selected, and the Board has ratified and approved PricewaterhouseCoopers
LLP, 1000 Louisiana Street, Suite 5800, Houston, Texas 77002-5021, as the independent registered public
accounting firm to audit the financial statements of the Fund. In connection with the audit of the Fund's financial
statements, the Fund entered into an engagement letter with PricewaterhouseCoopers LLP. The terms of the
engagement letter required by PricewaterhouseCoopers LLP, and agreed to by the Fund's Audit Committee,
include a provision mandating the use of mediation and arbitration to resolve any controversy or claim
between the parties arising out of or relating to the engagement letter or the services provided thereunder.
Counsel to the Trust. Legal matters for the Trust have been passed upon by Stradley Ronon Stevens & Young, LLP, 2005 Market Street, Suite 2600, Philadelphia, Pennsylvania 19103-7018.
Portfolio Managers
Appendix G contains the following information regarding the portfolio managers identified in the Fund’s Prospectus:
●
The dollar range of the managers’ investments in the Fund.
●
A description of the managers’ compensation structure.
●
Information regarding other accounts managed and potential conflicts of interest that
might arise from the management of multiple accounts.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Invesco and the Sub-Advisers have adopted compliance procedures that cover, among
other items, brokerage allocation and other trading practices. If all or a portion of the Fund’s assets are managed by one or more Sub-Advisers, the decision to buy and sell securities and broker-dealer selection
will be made by the Sub-Adviser for the assets it manages. Unless specifically noted, the Sub-Advisers’ brokerage allocation procedures do not materially differ from Invesco’s procedures.
As discussed below, Invesco and the Sub-Advisers, unless prohibited by applicable
law, may cause the Fund to pay a broker-dealer a commission for effecting a transaction that exceeds
the amount another broker-dealer would have charged for effecting the same transaction in recognition
of the value of brokerage and research services provided by that broker-dealer. Since January 3, 2018, under the European Union’s Markets in Financial Instruments Directive (MiFID II) and as implemented in the United
Kingdom, European Union and United Kingdom investment advisers, including Invesco Deutschland and Invesco
Asset Management, which may act as sub-adviser to the Fund as described in the Fund's prospectus, pay for research from broker-dealers directly out of their own resources, rather than through
client commissions.
Brokerage Transactions
Placing trades generally involves acting on portfolio manager instructions to buy
or sell a specified amount of portfolio securities, including selecting one or more broker-dealers, including
affiliated and third-party broker-dealers, to execute the trades, and negotiating commissions and spreads. Various
Invesco Ltd. subsidiaries have created a global equity trading desk. The global equity trading
desk has assigned local traders in primary trading centers around the world to place equity securities trades in their regions. Invesco’s Americas desk, with locations in the United States and Canada (the Americas Desk),
generally places trades of equity securities trading in North America, Canada and Latin America; the Asia
Pacific desk, with locations in Hong Kong, Japan, Australia and China (the Asia Pacific Desk), generally places
trades of equity securities trading in the Asia-Pacific markets; and the EMEA trading desk, with locations in
the United Kingdom (the EMEA Desk), generally places trades of equity securities trading in European, Middle
Eastern and African countries. Additionally, various Invesco Ltd. subsidiaries have created an alternatives
trading desk that generally places trades in derivatives, options and foreign currency. Invesco, Invesco
Canada, Invesco Japan, Invesco Deutschland, Invesco Hong Kong, Invesco Capital and Invesco Asset Management
use the global
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equity trading desk and the alternatives desk to place trades. Other Sub-Advisers
may use the global equity trading desk and the alternatives desk in the future. The trading procedures for the
global trading desks are similar in all material respects.
References in the language below to actions by Invesco or a Sub-Adviser making determinations
or taking actions related to equity trading include these entities’ delegation of these determinations/actions to the Americas Desk, the Asia Pacific Desk, and the EMEA Desk. Even when trading is delegated
by Invesco or the Sub-Advisers to the various arms of the global equity trading desk or to the alternatives
desk, Invesco or the Sub-Adviser that delegates trading is responsible for oversight of this trading activity.
Commissions
Invesco or the Sub-Advisers make decisions to buy and sell securities for each Fund,
select broker-dealers (each, a Broker), effect the Funds’ investment portfolio transactions, allocate brokerage fees in such transactions and, where applicable, negotiate commissions and spreads on transactions. Invesco’s and the Sub-Advisers’ primary consideration in effecting a security transaction is to obtain best execution for a Fund such that the Fund’s total cost or proceeds in each transaction is the most favorable under the circumstances, including commissions, mark-ups or mark-downs which are reasonable in relation to
the value of the research and brokerage services provided by the Broker. While Invesco and the Sub-Advisers
seek reasonably competitive commission rates, the Funds may not pay the lowest commission or spread
available. See “Broker Selection” below.
Some of the securities in which the Funds invest, such as fixed income securities,
are traded in OTC markets. Portfolio transactions in such markets may be effected on a principal basis
at net prices without commissions, but which include compensation to the Broker in the form of a mark-up
or mark-down, or on an agency basis, which involves the payment of negotiated brokerage commissions to the
Broker. Purchases of underwritten issues, which include initial public offerings and secondary offerings,
include a commission or concession paid by the issuer (not the Funds) to the underwriter. Purchases of money
market instruments may be made directly from issuers without the payment of commissions.
The Fund may engage in certain principal and agency transactions with banks and their
affiliates that own 5% or more of the outstanding voting securities of a Fund, provided the conditions
of an exemptive order received by the Invesco Funds from the SEC are met. In addition, the Fund may purchase
or sell a security from or to certain other Invesco Funds or other client accounts managed by Invesco
or a Sub-Adviser (and may invest in the Affiliated Money Market Funds) provided the Fund follows procedures
adopted by the Boards of the various Invesco Funds, including the Trust. These inter-fund transactions
generally do not generate brokerage commissions but may result in custodial fees or taxes or other
related expenses.
Brokerage commissions paid by each of the Funds during the last three fiscal years
ended February 28 or 29 are found in Appendix I.
Broker Selection
Invesco’s or the Sub-Advisers’ primary consideration in selecting Brokers to execute portfolio transactions for the Fund is to obtain best execution. In selecting a Broker to execute a portfolio
transaction in equity or fixed income securities for the Fund, Invesco or the Sub-Advisers consider the full
range and quality of a Broker’s services, including, but not limited to, the value of research and/or brokerage services provided (if permitted by applicable law or regulation), execution capability, commission rate,
spread or mark-up or mark-down (as applicable), willingness to commit capital, anonymity and responsiveness. In
each case, the determinative factor is not the lowest commission, spread or mark-up or mark-down
available but whether the transaction represents the best qualitative execution for the Fund under the circumstances.
Invesco and the Sub-Advisers will not select Brokers based upon their promotion or sale of Fund shares.
Unless prohibited by applicable law, such as MiFID II (described herein), in choosing
Brokers to execute portfolio transactions for the Fund, Invesco or a Sub-Adviser may select Brokers that
provide brokerage and/or research services (Soft Dollar Products) to Invesco or such Sub-Adviser. For
the avoidance of doubt, European Union and United Kingdom investment advisers, including Invesco Deutschland
and Invesco Asset
95
Management, which may act as sub-adviser to certain Invesco Funds as described in such Funds’ prospectuses, must pay for research from Brokers directly out of their own resources,
rather than through client commissions. Therefore, the use of the defined term “Sub-Advisers” throughout this section shall not be deemed to apply to those Sub-Advisers subject to the MiFID II prohibitions. Section
28(e) of the Exchange Act, provides that Invesco or a Sub-Adviser, under certain circumstances, lawfully
may cause a client account to pay a higher commission than the lowest available. Under Section 28(e)(1), Invesco
or the Sub-Adviser must make a good faith determination that the commissions paid are “reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular
transaction or [Invesco’s or the Sub-Adviser’s] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion.” The Soft Dollar Products provided by the Broker also must lawfully and appropriately assist Invesco or the Sub-Adviser in the performance of its investment decision-making
responsibilities. Accordingly, the Fund may pay a Broker commissions that are higher than those charged
by another Broker in recognition of the Broker’s provision of Soft Dollar Products to Invesco or the Sub-Advisers.
Invesco and the Sub-Advisers face a potential conflict of interest when they use client
trades to obtain Soft Dollar Products. This conflict exists because Invesco and the Sub-Advisers are
able to use the Soft Dollar Products to manage client accounts without paying cash for the Soft Dollar
Products, which reduces Invesco’s or a Sub-Adviser’s expenses to the extent that Invesco or such Sub-Adviser would have purchased such products had they not been provided by Brokers. Additionally, Section 28(e) permits
Invesco or a Sub-Adviser to use Soft Dollar Products for the benefit of any account it manages. Certain Invesco-managed
client accounts (or client accounts managed by the Sub-Advisers) may generate soft dollar
commissions used to purchase Soft Dollar Products that ultimately benefit other Invesco-managed client
accounts (or the other Sub-Adviser managed accounts), effectively cross-subsidizing the other Invesco-managed
client accounts (or the other Sub-Adviser-managed client accounts) that benefit directly from the product.
Invesco or a Sub-Adviser may not use all of the Soft Dollar Products provided by Brokers through which the
Fund effects securities transactions in connection with managing the Fund whose trades generated
the soft dollar commissions used to purchase such products.
Fixed income trading normally does not generate soft dollar commissions to pay for
Soft Dollar Products. Therefore, soft dollar commissions used to pay for Soft Dollar Products which are
used to manage certain fixed income Invesco Funds or other fixed-income client accounts are generated entirely
by equity-focused Invesco Funds and other equity-focused client accounts managed by Invesco. In other
words, certain fixed income Invesco Funds are cross-subsidized by the equity Invesco Funds in that the
fixed income Invesco Funds receive the benefit of Soft Dollar Products for which they do not pay. Similarly,
other client accounts managed by Invesco or certain of its affiliates may benefit from Soft Dollar Products
for which they do not pay.
Invesco and the Sub-Advisers attempt to reduce or eliminate the potential conflicts
of interest concerning the use of Soft Dollar Products by directing client trades for Soft Dollar Products
only if Invesco or the Sub-Adviser concludes that the Broker supplying the product is capable of providing best execution.
Certain Soft Dollar Products may be available directly from a vendor on a hard dollar
basis; other Soft Dollar Products are available only through Brokers in exchange for soft dollars. Invesco
and the Sub-Adviser use soft dollar commissions to purchase two types of Soft Dollar Products:
●
proprietary research created by the Broker executing the trade, and
●
other research and brokerage products and services created by third party vendors
that are supplied to Invesco or the Sub-Advisers through the Broker executing the trade.
Proprietary research consists primarily of traditional research reports, recommendations
and similar materials produced by the in-house research staffs of broker-dealer firms. This research
includes evaluations and recommendations of specific companies or industry groups, as well as analyses
of general economic and market conditions and trends, market data, contacts and other related information
and assistance. Invesco periodically rates the quality of proprietary research produced by various Brokers.
Based on the evaluation of the quality of information that Invesco receives from each Broker, Invesco develops
an estimate of each
96
Broker’s targeted share of Invesco clients’ commission dollars and attempts to direct trades to these firms to meet these estimates.
Soft Dollar Products are paid for by Invesco and Sub-Advisers using soft dollar commissions
through one of two methods: full-service trading or commission sharing agreements (“CSAs”). In a full-service trading arrangement, the Broker itself provides proprietary research products and brokerage
services to Invesco or the Sub-Adviser, and commissions paid to the Broker are retained by it to pay for
both trade execution and the proprietary research products and brokerage services provided by it. In a CSA
arrangement with a Broker, a portion of the commission paid to the Broker is made available by the Broker to
Invesco or the Sub-Adviser to pay a third party for third party research and brokerage products and services.
Soft Dollar Products received from Brokers supplement Invesco’s and the Sub-Advisers’ own research (and the research of certain of its affiliates), and may include the following types
of products and services:
●
Database Services – comprehensive databases containing current and/or historical information on companies and industries and indices. Examples include historical securities prices,
earnings estimates and financial data. These services may include software tools that allow
the user to search the database or to prepare value-added analyses related to the investment process
(such as forecasts and models used in the portfolio management process).
●
Quotation/Trading/News Systems – products that provide real time market data information, such as pricing of individual securities and information on current trading, as well as a
variety of news services.
●
Economic Data/Forecasting Tools – various macroeconomic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
●
Quantitative/Technical Analysis – software tools that assist in quantitative and technical analysis of investment data.
●
Fundamental Company/Industry Analysis – company or industry specific fundamental investment research.
●
Fixed Income Security Analysis – data and analytical tools that pertain specifically to fixed income securities. These tools assist in creating financial models, such as cash flow projections
and interest rate sensitivity analyses, which are relevant to fixed income securities.
●
Other Specialized Tools – other specialized products, such as consulting analyses, access to industry experts, and distinct investment expertise or custom built investment-analysis
software.
Occasionally, Invesco or a Sub-Adviser will receive certain “mixed-use” research and brokerage services, a portion of the cost of which is eligible under Section 28(e) for payment with soft
dollar commissions and a portion of which is not. In these instances, Invesco or the Sub-Adviser will make
a reasonable allocation of the cost of the product or service according to its use and pay for only that portion
of the cost that is eligible under Section 28(e) with soft dollar commission (and will pay for the remaining portion
with its own resources).
Outside research assistance is useful to Invesco and the Sub-Advisers because the
Brokers used by Invesco and the Sub-Advisers and the providers of other Soft Dollar Products tend
to provide more in-depth analysis of a broader universe of securities and other matters than Invesco’s or the Sub-Advisers’ staff follows. In addition, such services provide Invesco or the Sub-Advisers with a diverse
perspective on financial markets. In some cases, Soft Dollar Products are available only from the Broker providing
them. In other cases, Soft Dollar Products may be obtainable from alternative sources in return for
cash payments. Invesco and the Sub-Advisers believe that because Broker research supplements rather than replaces Invesco’s or the Sub-Advisers’ research, the receipt of such research tends to improve the quality of Invesco’s or the Sub-Advisers’ investment advice. The advisory fee paid by the Fund is not reduced because Invesco
or the Sub-Advisers receive such services. To the extent the Fund's portfolio transactions are used to
obtain Soft Dollar Products, the brokerage commissions charged to the Fund might exceed those that might
otherwise have been paid.
97
Portfolio transactions may be effected through Brokers that recommend the Fund to
their clients, or that act as agent in the purchase of a Fund’s shares for their clients, provided that Invesco or the Sub-Advisers believe such Brokers provide best execution and such transactions are executed in compliance with Invesco’s policy against using directed brokerage to compensate Brokers for promoting or selling
Invesco Fund shares. Invesco and the Sub-Advisers will not enter into a binding commitment with Brokers
to place trades with such Brokers involving brokerage commissions in precise amounts.
As noted above, under MiFID II, European Union and United Kingdom investment advisers,
including Invesco Deutschland and Invesco Asset Management, are not permitted to use soft dollar
commissions to pay for research from brokers but rather must pay for research out of their own profit
and loss or have research costs paid by clients through research payment accounts that are funded by a specific
client research charge or the research component of trade orders. Such payments for research must be unbundled
from the payments for execution. As a result, Invesco Deutschland and Invesco Asset Management
are restricted from using Soft Dollar Products in managing the Invesco Funds that they sub-advise.
The amount of brokerage commissions paid by the Fund to brokers for providing Section 28(e) research/brokerage services under Section 28(e) of the Exchange Act and the approximate dollar amount of the transactions involved for the last fiscal year or period, as applicable, ended February 28 or 29 are found in Appendix J.
Affiliated Transactions
Invesco or a Sub-Adviser may place trades for equity securities with Invesco Capital
Markets, Inc. (ICMI), a broker-dealer with whom it is affiliated, provided that Invesco or the Sub-Adviser determines that ICMI’s trade execution costs are at least comparable to those of non-affiliated brokerage
firms with which Invesco or the Sub-Adviser could otherwise place similar trades for similar securities. ICMI
receives brokerage commissions in connection with effecting trades for the Fund and, therefore, use of
ICMI presents a conflict of interest for Invesco or a Sub-Adviser. Trades placed through ICMI, including the brokerage
commissions paid to ICMI, are subject to procedures adopted by the Board that are designed to mitigate
this conflict of interest.
Information regarding any brokerage commissions on affiliated transactions may be
found in Appendix I.
Regular Brokers
Information concerning the Fund's acquisition of securities of its brokers during
the last fiscal year or period, as applicable, ended February 28 or 29 is found in Appendix J.
Allocation of Portfolio Transactions
Invesco and the Sub-Advisers manage numerous Invesco Funds and other client accounts.
Some of these client accounts may have investment objectives similar to the Fund. Frequently,
identical securities will be appropriate for investment by multiple Invesco Funds or other client accounts.
However, the position of each client account in the same security and the length of time that each client account
may hold its investment in the same security may vary. Invesco or a Sub-Adviser will also determine
the timing and amount of purchases for a client account based on its cash position. If the purchase
or sale of securities is consistent with the investment policies of the Fund(s) and one or more other client
accounts, and is considered at or about the same time, Invesco or the Sub-Adviser will allocate transactions
in such securities among the Fund(s) and these client accounts on a pro rata basis based on order size
or in such other manner believed by Invesco or the Sub-Adviser to be fair and equitable. In determining what
is fair and equitable, Invesco or the Sub-Adviser can consider various factors, including how closely the
investment opportunity matches the investment objective and strategy of the Fund or client account, the capital
available to the Fund or client account, and which portfolio management team sourced the opportunity. Invesco
or the Sub-Adviser may combine orders for the purchase or sale of securities and other investments for
multiple client accounts, including the Funds, in accordance with applicable laws and regulations to obtain
the most favorable execution. Aggregated transactions could, however, adversely affect the Fund’s ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
98
Allocation of Initial Public Offering (IPO) Transactions
Certain of the Invesco Funds or other client accounts managed by Invesco or a Sub-Adviser
may become interested in participating in IPOs. Purchases of IPOs by one Invesco Fund or other
client account may also be considered for purchase by one or more other Invesco Funds or client accounts.
Invesco combines indications of interest for IPOs for all Invesco Funds and client accounts desiring
to purchase the securities to be issued in that IPO. When the full amount of all IPO orders for such Invesco Funds
and client accounts cannot be filled completely, Invesco or the Sub-Adviser shall allocate such transactions
in accordance with the following procedures.
Invesco or the Sub-Adviser may determine the eligibility of each Invesco Fund and
client account that seeks to participate in a particular IPO by reviewing a number of factors, including
market capitalization/liquidity suitability and sector/style suitability of the investment with the Invesco Fund’s or client account’s investment objective, policies, strategies and current holdings ,as well as the commitment to or level of interest in the particular issuer by the portfolio managers of such Invesco Fund or client account. Invesco or the Sub-Adviser will allocate securities issued in IPOs to eligible Invesco Funds
and client accounts on a pro rata basis based on order size.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Please refer to Appendix K for information on Purchase, Redemption and Pricing of
Shares.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
Dividends and Distributions
The following discussion of dividends and distributions should be read in connection
with the applicable sections in the Prospectus.
All dividends and distributions paid in cash and will not be reinvested in additional
Fund shares, as set forth in the Prospectus under the caption “Purchasing Shares and Shareholder Eligibility – Fund Distribution.”
In the event, the Fund incurs or anticipates any unusual expense, loss or depreciation
in the value of a portfolio investment that would adversely affect the net asset value per share of
the Fund for a particular period, the Board would at that time consider whether to adhere to the present dividend
policy described above or to revise it in light of then prevailing circumstances. For example, if the
net asset value per share of the Fund was reduced, or was anticipated to be reduced below $1.00, the Board might
suspend further dividend payments on shares of the Fund until the net asset value returns to $1.00.
Thus, such expense, loss or depreciation might result in a shareholder receiving no dividends for the period
during which it held shares of the Fund and/or its receiving upon redemption a price per share lower than that
which it paid.
Tax Matters
The following is a summary of certain additional tax considerations generally affecting
the Fund and its shareholders that are not described in the Prospectus. No attempt is made to present
a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussion here and
in the Prospectus is not intended as a substitute for careful tax planning.
This “Tax Matters” section is based on the Code and applicable regulations in effect on the date of this SAI. Future legislative, regulatory or administrative changes, including provisions
of current law that sunset and thereafter no longer apply, or court decisions may significantly change the tax
rules applicable to the Fund and its shareholders. Any of these changes or court decisions may have a retroactive
effect.
This is for general information only and not tax advice. All investors should consult
their own tax advisors as to the federal, state, local and foreign tax provisions applicable to
them.
Taxation of the Fund. The Fund has elected and intends to qualify (or, if newly organized, intends to elect and qualify) each year as a “regulated investment company” (sometimes referred to as a regulated
99
investment company, RIC or fund) under Subchapter M of the Code. If the Fund qualifies,
the Fund will not be subject to federal income tax on the portion of its investment company taxable income
(i.e., generally, taxable interest, dividends, net short-term capital gains and other taxable ordinary income
net of expenses without regard to the deduction for dividends paid) and net capital gain (i.e., the excess
of net long-term capital gains over net short-term capital losses) that it distributes to shareholders.
Qualification as a regulated investment company. In order to qualify for treatment as a regulated investment company, the Fund must satisfy the following requirements:
●
Distribution Requirement – the Fund must distribute an amount equal to the sum of at least 90% of its investment company taxable income and 90% of its net tax-exempt income, if any,
for the tax year (certain distributions made by the Fund after the close of its tax year are considered
distributions attributable to the previous tax year for purposes of satisfying this
requirement).
●
Income Requirement – the Fund must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, and gains from the sale
or other disposition of stock, securities or foreign currencies, or other income (including,
but not limited to, gains from options, futures or forward contracts) derived from its business of investing
in such stock, securities or currencies and net income derived from qualified publicly traded partnerships
(QPTPs).
●
Asset Diversification Test – the Fund must satisfy the following asset diversification test at the close of each quarter of the Fund’s tax year: (1) at least 50% of the value of the Fund’s assets must consist of cash and cash items, U.S. government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has not invested
more than 5% of the value of the Fund’s total assets in securities of an issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer); and (2) no more
than 25% of the value of the Fund’s total assets may be invested in the securities of any one issuer (other than U.S. government securities or securities of other regulated investment companies) or of
two or more issuers which the Fund controls and which are engaged in the same or similar trades
or businesses, or, collectively, in the securities of QPTPs.
In some circumstances, the character and timing of income realized by the Fund for
purposes of the Income Requirement or the identification of the issuer for purposes of the Asset Diversification
Test is uncertain under current law with respect to a particular investment, and an adverse
determination or future guidance by the IRS with respect to such type of investment may adversely affect the Fund’s ability to satisfy these requirements. See “Tax Treatment of Portfolio Transactions” with respect to the application of these requirements to certain types of investments. In other circumstances, the Fund may
be required to sell portfolio holdings in order to meet the Income Requirement, Distribution Requirement,
or Asset Diversification Test, which may have a negative impact on the Fund’s income and performance. In lieu of potential disqualification, the Fund is permitted to pay a tax for certain failures to satisfy
the Asset Diversification Test or Income Requirement, which, in general, are limited to those due to reasonable cause
and not willful neglect.
The Fund may use “equalization accounting” (in lieu of making some cash distributions) in determining the portion of its income and gains that has been distributed. If the Fund uses equalization
accounting, it will allocate a portion of its undistributed investment company taxable income and net
capital gain to redemptions of Fund shares and will correspondingly reduce the amount of such income and gains
that it distributes in cash. However, the Fund intends to make cash distributions for each taxable year in
an aggregate amount that is sufficient to satisfy the Distribution Requirement without taking into account
its use of equalization accounting. If the IRS determines that the Fund’s allocation is improper and that the Fund has under-distributed its income and gain for any taxable year, the Fund may be liable for federal income
and/or excise tax.
If for any taxable year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) would be subject to tax at the corporate income
tax rate without any deduction for dividends paid to shareholders, and the dividends would be taxable to
the shareholders as ordinary income (or possibly as qualified dividend income) to the extent of the Fund’s current and
100
accumulated earnings and profits. Failure to qualify as a regulated investment company
thus would have a negative impact on the Fund’s income and performance. Subject to savings provisions for certain inadvertent failures to satisfy the Income Requirement or Asset Diversification Test which, in
general, are limited to those due to reasonable cause and not willful neglect, it is possible that the Fund will
not qualify as a regulated investment company in any given tax year. Even if such savings provisions apply, the
Fund may be subject to a monetary sanction of $50,000 or more. Moreover, the Board reserves the right not
to maintain the qualification of the Fund as a regulated investment company if it determines such
a course of action to be beneficial to shareholders.
Portfolio turnover. For investors that hold their Fund shares in a taxable account, a high portfolio
turnover rate (except in a money market fund that maintains a stable net asset value) may result
in higher taxes. This is because a fund with a high turnover rate may accelerate the recognition of capital
gains and more of such gains are likely to be taxable as short-term rather than long-term capital gains in
contrast to a comparable fund with a low turnover rate. Any such higher taxes would reduce the Fund’s after-tax performance. See “Taxation of Fund Distributions — Capital gain dividends” below. For non-U.S. investors, any such acceleration of the recognition of capital gains that results in more short-term and
less long-term capital gains being recognized by the Fund may cause such investors to be subject to increased U.S.
withholding taxes. See “Foreign Shareholders — U.S. withholding tax at the source” below.
Capital loss carryovers. The capital losses of the Fund, if any, do not flow through to shareholders. Rather, the Fund may use its capital losses, subject to applicable limitations, to
offset its capital gains without being required to pay taxes on or distribute to shareholders such gains that are offset
by the losses. If the Fund has a “net capital loss” (that is, capital losses in excess of capital gains), the excess (if any) of the Fund’s net short-term capital losses over its net long-term capital gains is treated as a short-term capital loss arising on the first day of the Fund’s next taxable year, and the excess (if any) of the Fund’s net long-term capital losses over its net short-term capital gains is treated as a long-term capital
loss arising on the first day of the Fund’s next taxable year. Any such net capital losses of the Fund that are not used to offset capital gains may be carried forward indefinitely to reduce any future capital gains realized
by the Fund in succeeding taxable years. The amount of capital losses that can be carried forward and used in
any single year is subject to an annual limitation if there is a more than 50% “change in ownership” of the Fund. An ownership change generally results when shareholders owning 5% or more of the Fund increase their aggregate
holdings by more than 50% over a three-year look-back period. An ownership change could result
in capital loss carryovers being used at a slower rate thereby reducing the Fund’s ability to offset capital gains with those losses. An increase in the amount of taxable gains distributed to the Fund’s shareholders could result from an ownership change. The Fund undertakes no obligation to avoid or prevent an ownership
change, which can occur in the normal course of shareholder purchases and redemptions or as a result
of engaging in a tax-free reorganization with another fund. Moreover, because of circumstances beyond the Fund’s control, there can be no assurance that the Fund will not experience, or has not already experienced,
an ownership change.
Deferral of late year losses. The Fund may elect to treat part or all of any “qualified late year loss” as if it had been incurred in the succeeding taxable year in determining the Fund’s taxable income, net capital gain, net short-term capital gain, and earnings and profits. The effect of this election is to treat any such “qualified late year loss” as if it had been incurred in the succeeding taxable year, which may change the timing, amount, or characterization of Fund distributions (see “Taxation of Fund Distributions — Capital gain dividends” below). A “qualified late year loss” includes:
(i) any net capital loss incurred after October 31 of the current taxable year, or,
if there is no such loss, any net long-term capital loss or any net short-term capital loss incurred after
October 31 of the current taxable year (post-October capital losses); and
(ii) the sum of (1) the excess, if any, of (a) specified losses incurred after October
31 of the current taxable year, over (b) specified gains incurred after October 31 of the current taxable
year and (2) the excess, if any, of (a) ordinary losses incurred after December 31 of the current taxable
year, over (b) the ordinary income incurred after December 31 of the current taxable year.
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The terms “specified losses” and “specified gains” mean ordinary losses and gains from the sale, exchange, or other disposition of property (including the termination of a position
with respect to such property), foreign currency losses and gains, and losses and gains resulting from
holding stock in a passive foreign investment company (PFIC) for which a mark-to-market election is in effect. The terms “ordinary losses” and “ordinary income” mean other ordinary losses and income that are not described in the preceding sentence.
Special rules apply to a fund with a fiscal year ending in November or December that
elects to use its taxable year for determining its capital gain net income for excise tax purposes.
Undistributed capital gains. The Fund may retain or distribute to shareholders its net capital gain for each taxable year. The Fund currently intends to distribute net capital gains. If the Fund
elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available
capital loss carryovers) at the corporate income tax rate. If the Fund elects to retain its net capital gain,
it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its
pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of
such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share
of tax paid by the Fund on the gain and will increase the tax basis for its shares by an amount equal to the deemed
distribution less the tax credit.
Federal excise tax. To avoid a 4% non-deductible excise tax, the Fund must distribute by December 31
of each year an amount equal to at least: (1) 98% of its ordinary income for the calendar
year, (2) 98.2% of capital gain net income (the excess of the gains from sales or exchanges of capital
assets over the losses from such sales or exchanges) for the one-year period ended on October 31 of such
calendar year (or, at the election of a regulated investment company having a taxable year ending November 30
or December 31, for its taxable year), and (3) any prior year undistributed ordinary income and capital
gain net income. The Fund may elect to defer to the following year any net ordinary loss incurred for the portion
of the calendar year which is after the beginning of the Fund’s taxable year. Also, the Fund will defer any “specified gain” or “specified loss” which would be properly taken into account for the portion of the calendar after October 31. Any net ordinary loss, specified gain, or specified loss deferred shall be treated
as arising on January 1 of the following calendar year. Generally, the Fund may make sufficient distributions to
avoid liability for federal income and excise tax, but can give no assurances that all or a portion of such liability
will be avoided. In addition, under certain circumstances temporary timing or permanent differences in
the realization of income and expense for book and tax purposes can result in the Fund having to pay an excise
tax.
Foreign income tax. Investment income received by the Fund from sources within foreign countries may
be subject to foreign income tax withheld at the source, and the amount of tax withheld
generally will be treated as an expense of the Fund. The United States has entered into tax treaties
with many foreign countries that entitle the Fund to a reduced rate of, or exemption from, tax on such
income. Some countries require the filing of a tax reclaim or other forms to receive the benefit of the reduced
tax rate; whether or when the Fund will receive the tax reclaim is within the control of the individual country.
Information required on these forms may not be available such as shareholder information; therefore, the Fund
may not receive the reduced treaty rates or potential reclaims. Other countries have conflicting and changing
instructions and restrictive timing requirements which may cause the Fund not to receive the reduced
treaty rates or potential reclaims. Other countries may subject capital gains realized by the Fund on sale or
disposition of securities of that country to taxation. These and other factors may make it difficult for the Fund
to determine in advance the effective rate of tax on its investments in certain countries. Under certain circumstances,
the Fund may elect to pass-through certain eligible foreign income taxes paid by the Fund to shareholders,
although it reserves the right not to do so. If the Fund makes such an election and obtains a refund of
foreign taxes paid by the Fund in a prior year, the Fund may be eligible to reduce the amount of foreign taxes
reported by the Fund to its shareholders, generally by the amount of the foreign taxes refunded, for the year
in which the refund is received. Certain foreign taxes imposed on the Fund's investments, such as a foreign
financial transaction tax, may not be creditable against U.S. income tax liability or eligible for pass
through by the Fund to its shareholders.
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As a result of several court cases, in certain countries across the European Union,
the Fund may have filed additional tax reclaims for previously withheld taxes on dividends earned in
those countries ("EU reclaims"). For U.S. income tax purposes, EU reclaims plus interest received by the
Fund, if any, reduce the amount of foreign taxes Fund shareholders can use as tax deductions or credits on
their income tax returns, if any. Any interest received that offsets such foreign taxes is required to be reported
to the shareholder as additional dividend income from the Fund and included in the shareholder's gross income.
In the event that EU reclaims received by the Fund during a fiscal year exceed foreign withholding taxes
paid by the Fund, and the Fund previously passed through to its shareholders foreign taxes incurred by the
Fund to be used as a credit or deduction on a shareholder's income tax return, the Fund will enter into
a closing agreement with the IRS in order to pay the associated tax liability on behalf of the Fund's shareholders.
Investments in Foreign Currencies. Gains from the sale or other disposition of foreign currencies and other income (including but not limited to gains from options, futures or forward
contracts) derived from investing in stock, securities, or foreign currencies generally are included as qualifying
income in applying the Income Requirement. It should be noted, however, that for purposes of the Income Requirement,
the Secretary of the Treasury is authorized to issue regulations that would exclude from
qualifying income foreign currency gains which are not directly related to the principal business of the RIC
of investing in stock or securities (or options and futures with respect to stock or securities). No regulations
have been issued pursuant to this authorization. It is possible, however, that such regulations may
be issued in the future. If such future regulations were applied to the Fund, it is possible that the amount of
their qualifying income would no longer satisfy the Income Requirement and the Fund would fail to qualify
as a RIC. There is a possibility such regulations would be applied retroactively, in which case the Fund
might not qualify as a RIC for one or more years. In the event the Treasury Department issues such regulations,
the Board may authorize a significant change in investment strategy or other action. It is also
possible that the Fund's strategy of investing in foreign currencies or foreign currency instruments, such
as options, futures or forward contracts, might cause the Funds to fail to satisfy the Asset Diversification Test,
resulting in their failure to qualify as RICs. The IRS has not issued any guidance on how to apply the asset diversification
test to foreign currencies or instrument on foreign currencies. The tax treatment of the Fund and
its shareholders in the event the Fund fails to qualify as a RIC is described above under “Taxation of the Fund ― Qualification as a regulated investment company.”
Taxation of Fund Distributions. The Fund intends to qualify each year to pay exempt-interest dividends by satisfying the requirement that at the close of each quarter of the Fund’s taxable year at least 50% of the Fund’s total assets consists of Municipal Securities, which are exempt from federal income tax.
Distributions of ordinary income. The Fund may invest a portion of its assets in securities that pay taxable interest. The Fund also may distribute to you any market discount and net short-term
capital gains from the sale of its portfolio securities. If you are a taxable investor, Fund distributions
from this income are taxable to you as ordinary income to the extent of the Fund’s earnings and profits. None of the dividends paid by the Fund will qualify for the dividends-received deduction in the case of corporate shareholders
or as qualified dividend income subject to reduced rates of taxation in the case of noncorporate shareholders.
Provided the Fund otherwise satisfies the Distribution Requirement, the Fund reserves the right
to retain, and not distribute to shareholders, income and gains taxable as ordinary income, in which case the Fund
would be subject to regular corporate income tax rate.
Capital gain dividends. Taxes on distributions of capital gains are determined by how long the Fund owned the investments that generated them, rather than how long a shareholder has
owned his or her shares. In general, the Fund will recognize long-term capital gain or loss on the
sale or other disposition of assets it has owned for more than one year, and short-term capital gain or loss on
investments it has owned for one year or less. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) that are properly reported by the Fund to shareholders as capital gain
dividends generally will be taxable to a shareholder receiving such distributions as long-term capital
gain. Long-term capital gain rates applicable to individuals are 0%, 15%, or 20% depending on the nature of the
capital gain and the individual’s taxable income. Distributions of net short-term capital gains for a taxable year in excess of net
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long-term capital losses for such taxable year generally will be taxable to a shareholder
receiving such distributions as ordinary income.
Qualified dividend income for individuals. Ordinary income dividends reported by the Fund to shareholders as derived from qualified dividend income will be taxed in the hands
of individuals and other noncorporate shareholders at the rates applicable to long-term capital gain. Qualified
dividend income means dividends paid to the Fund (a) by domestic corporations, (b) by foreign corporations
that are either (i) incorporated in a possession of the United States, or (ii) are eligible for benefits
under certain income tax treaties with the United States that include an exchange of information program, or
(c) with respect to stock of a foreign corporation that is readily tradable on an established securities market
in the United States. Both the Fund and the investor must meet certain holding period requirements to qualify Fund
dividends for this treatment. Income derived from investments in derivatives, fixed-income securities,
PFICs, and income received “in lieu of” dividends in a securities lending transaction generally is not eligible for treatment as qualified dividend income. If the qualifying dividend income received by the Fund
is equal to 95% (or a greater percentage) of the Fund’s gross income (exclusive of net capital gain) in any taxable year, all of the ordinary income dividends paid by the Fund will be qualifying dividend income.
Qualified REIT dividends. Under the Tax Cuts and Jobs Act “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and portions of REIT dividends designated
as qualified dividend income) are treated as eligible for a 20% deduction by noncorporate taxpayers. This
deduction, if allowed in full, equates to a maximum effective tax rate of 29.6% (37% top rate applied to income
after 20% deduction). A Fund may choose to report the special character of “qualified REIT dividends” to a shareholder, provided both the Fund and a shareholder meet certain holding period requirements with respect
to their shares. A noncorporate shareholder receiving such dividends would treat them as eligible for
the 20% deduction, provided the RIC shares were held by the shareholder for more than 45 days during
the 91-day period beginning on the date that is 45 days before the date on which the shares become ex-dividend
with respect to such dividend. The amount of a RIC’s dividends eligible for the 20% deduction for a taxable year is limited to the excess of the RIC’s qualified REIT dividends for the taxable year over allocable expenses.
Corporate dividends-received deduction. Ordinary income dividends reported by the Fund to shareholders as derived from qualified dividends from domestic corporations will qualify for the
50% dividends-received deduction generally available to corporations. The availability of the dividends-received
deduction is subject to certain holding period and debt financing restrictions imposed under the Code on the
corporation claiming the deduction. Income derived by the Fund from investments in derivatives, fixed-income
and foreign securities generally is not eligible for this treatment.
Return of capital distributions. Distributions by the Fund that are not paid from earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder’s tax basis in his shares; any excess will be treated as gain from the sale of his shares. Thus, the portion
of a distribution that constitutes a return of capital will decrease the shareholder’s tax basis in his Fund shares (but not below zero), and will result in an increase in the amount of gain (or decrease in the amount
of loss) that will be recognized by the shareholder for tax purposes on the later sale of such Fund shares.
Return of capital distributions can occur for a number of reasons including, among others, the Fund
over-estimates the income to be received from certain investments such as those classified as partnerships or equity REITs. See “Tax Treatment of Portfolio Transactions – Investments in U.S. REITs”.
Impact of realized but undistributed income and gains, and net unrealized appreciation
of portfolio securities. At the time of your purchase of shares (except in a money market fund that maintains
a stable net asset value), the Fund’s net asset value may reflect undistributed income, undistributed capital gains, or net unrealized appreciation of portfolio securities held by the Fund. A subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable and would
be taxed as either ordinary income (some portion of which may be taxed as qualified dividend income)
or capital gain unless you are investing through a tax-advantaged arrangement, such as a 401(k) plan or an individual
retirement account. The Fund may be able to reduce the amount of such distributions by utilizing
its capital loss carryovers, if any.
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Pass-through of foreign tax credits. If more than 50% of the value of the Fund’s total assets at the end of a fiscal year is invested in foreign securities, or if the Fund is a qualified fund
of funds (i.e., a fund at least 50 percent of the value of the total assets of which, at the close of each quarter of
the taxable year, is represented by interests in other RICs), the Fund may elect to “pass-through” to the Fund’s shareholders the amount of foreign income tax paid by the Fund (the Foreign Tax Election) in lieu of
deducting such amount in determining its investment company taxable income. Pursuant to the Foreign Tax Election,
shareholders will be required (i) to include in gross income, even though not actually received, their
respective pro-rata shares of the foreign income tax paid by the Fund that are attributable to any distributions
they receive; and (ii) either to deduct their pro-rata share of foreign tax in computing their taxable income or
to use it (subject to various Code limitations) as a foreign tax credit against federal income tax (but not both).
No deduction for foreign tax may be claimed by a noncorporate shareholder who does not itemize deductions or who
is subject to the alternative minimum tax. Shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income tax paid by the Fund due to certain limitations
that may apply. The Fund reserves the right not to pass-through to its shareholders the amount of foreign
income taxes paid by the Fund. Additionally, any foreign tax withheld on payments made “in lieu of” dividends or interest will not qualify for the pass-through of foreign tax credits to shareholders. See “Tax Treatment of Portfolio Transactions — Securities lending” below.
Consent dividends. The Fund may utilize consent dividend provisions of Section 565 of the Code to make
distributions. Provided that all shareholders agree in a consent filed with the income
tax return of the Fund to treat as a dividend the amount specified in the consent, the amount will be considered
a distribution just as any other distribution paid in money and reinvested back into the Fund.
Tax credit bonds. If the Fund holds, directly or indirectly, one or more “tax credit bonds” (including build America bonds, clean renewable energy bonds and qualified tax credit bonds) on one
or more applicable dates during a taxable year, the Fund may elect to permit its shareholders to claim
a tax credit on their income tax returns equal to each shareholder’s proportionate share of tax credits from the applicable bonds that otherwise would be allowed to the Fund. In such a case, shareholders must include
in gross income (as interest) their proportionate share of the income attributable to their proportionate
share of those offsetting tax credits. A shareholder’s ability to claim a tax credit associated with one or more tax credit bonds may be subject to certain limitations imposed by the Code. (Under the Tax Cuts and Jobs Act,
build America bonds, clean renewable energy bonds and certain other qualified bonds may no longer be issued
after December 31, 2017.) Even if the Fund is eligible to pass-through tax credits to shareholders, the
Fund may choose not to do so.
U.S. government interest. Income earned on certain U.S. government obligations is exempt from state and local personal income taxes if earned directly by you. States also grant tax-free
status to dividends paid to you from interest earned on direct obligations of the U.S. government, subject
in some states to minimum investment or reporting requirements that must be met by the Fund. Income on investments
by the Fund in certain other obligations, such as repurchase agreements collateralized by U.S. government
obligations, commercial paper and federal agency-backed obligations (e.g., GNMA or FNMA obligations),
generally does not qualify for tax-free treatment. The rules on exclusion of this income are different
for corporations.
Dividends declared in October, November or December and paid in January. Ordinarily, shareholders are required to take distributions by the Fund into account in the year in which the distributions
are made. However, dividends declared in October, November or December of any year and payable
to shareholders of record on a specified date in such a month will be deemed to have been received by
the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually
paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income
tax consequences of distributions made (or deemed made) during the year in accordance with the guidance
that has been provided by the IRS.
Medicare tax. A 3.8% Medicare tax is imposed on net investment income earned by certain individuals,
estates and trusts. “Net investment income,” for these purposes, means investment income, including ordinary dividends and capital gain distributions received from the Fund and net gains
from redemptions or
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other taxable dispositions of Fund shares, reduced by the deductions properly allocable
to such income. In the case of an individual, the tax will be imposed on the lesser of (1) the shareholder’s net investment income or (2) the amount by which the shareholder’s modified adjusted gross income exceeds $250,000 (if the shareholder is married and filing jointly or a surviving spouse), $125,000 (if the
shareholder is married and filing separately) or $200,000 (in any other case). This Medicare tax, if applicable,
is reported by you on, and paid with, your federal income tax return. Net investment income does not include
exempt-interest dividends.
Sale or Redemption of Fund Shares. A shareholder will recognize gain or loss on the sale or redemption of shares of the Fund in an amount equal to the difference between the
proceeds of the sale or redemption and the shareholder’s adjusted tax basis in the shares. If you owned your shares as a capital asset, any gain or loss that you realize will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than one year. Capital losses in any
year are deductible only to the extent of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
Tax basis information. The Fund is required to report to you and the IRS annually on Form 1099 B the cost basis of shares purchased or acquired on or after January 1, 2012 where the cost
basis of the shares is known by the Fund (referred to as covered shares) and which are disposed of after
that date. However, cost basis reporting is not required for certain shareholders, including shareholders investing
in the Fund through a tax-advantaged retirement account, such as a 401(k) plan or an individual retirement
account, or shareholders investing in a money market fund that maintains a stable net asset value. When required
to report cost basis, the Fund will calculate it using the Fund’s default method of average cost, unless you instruct the Fund to use a different calculation method. In general, average cost is the total cost basis of
all your shares in an account divided by the total number of shares in the account. To determine whether short-term
or long-term capital gains taxes apply, the IRS presumes you redeem your oldest shares first.
The IRS permits the use of several methods to determine the cost basis of mutual fund
shares. The method used will determine which specific shares are deemed to be sold when there
are multiple purchases on different dates at differing share prices, and the entire position is not sold
at one time. The Fund does not recommend any particular method of determining cost basis, and the use of other methods
may result in more favorable tax consequences for some shareholders. It is important that you consult
with your tax advisor to determine which method is best for you and then notify the Fund if you intend to utilize
a method other than average cost for covered shares.
In addition to the Fund’s default method of average cost, other cost basis methods offered by Invesco, which you may elect to apply to covered shares, include:
●
First-In, First-Out — shares acquired first in the account are the first shares depleted.
●
Last-In, First-Out — shares acquired last in the account are the first shares depleted.
●
High Cost — shares acquired with the highest cost per share are the first shares depleted.
●
Low Cost — shares acquired with the lowest cost per share are the first shares depleted.
●
Loss/Gain Utilization — depletes shares with losses before gains, consistent with the objective of minimizing taxes. For shares that yield a loss, shares owned one year or less (short-term)
will be depleted ahead of shares owned more than one year (long-term). For gains, long-term
shares will be depleted ahead of short-term gains.
●
Specific Lot Identification — shareholder selects which lots to deplete at time of each disposition. Transaction amount must be in shares. If insufficient shares are identified at the
time of disposition, then a secondary default method of first-in, first-out will be applied.
You may elect any of the available methods detailed above for your covered shares.
If you do not notify the Fund of your elected cost basis method, the default method of average cost will
be applied to your covered shares upon redemption. The cost basis for covered shares will be calculated
separately from any “noncovered shares” (defined below) you may own. You may change or revoke the use of the average cost method and revert to another cost basis method if you notify the Fund by the date
of the first sale, exchange,
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or other disposition of your covered shares. In addition, you may change to another
cost basis method at any time by notifying the Fund, but only for shares acquired after the date of the change
(the change is prospective). The basis of the shares that were averaged before the change will remain
averaged after the date of the change.
The Fund may also provide Fund shareholders (but not the IRS) with information concerning
the average cost basis of their shares purchased prior to January 1, 2012 (noncovered shares)
in order to assist you with the calculation of gain or loss from a sale or redemption of noncovered shares. With
the exception of the specific lot identification method, Invesco first depletes noncovered shares in first-in,
first-out order before applying your elected method to your remaining covered shares. If you want to deplete
your shares in a different order then you must elect specific lot identification and choose the lots
you wish to deplete first. Shareholders that use the average cost method for noncovered shares must make the
election to use the average cost method for these shares on their federal income tax returns in accordance
with Treasury regulations. This election for noncovered shares cannot be made by notifying the Fund.
The Fund will compute and report the cost basis of your Fund shares sold or exchanged
by taking into account all of the applicable adjustments to cost basis and holding periods as required
by the Code and Treasury regulations for purposes of reporting these amounts to you and, in the case
of covered shares, to the IRS. However, the Fund is not required to, and in many cases the Fund does not
possess the information to, take all possible basis, holding period or other adjustments into account in reporting
cost basis information to you. Therefore, shareholders should carefully review the cost basis information
provided by the Fund, whether this information is provided pursuant to compliance with cost basis reporting
requirements for shares acquired on or after January 1, 2012, or is provided by the Fund as a service to shareholders
for shares acquired prior to that date, and make any additional basis, holding period or other
adjustments that are required by the Code and Treasury regulations when reporting these amounts on their
federal income tax returns. Shareholders remain solely responsible for complying with all federal income
tax laws when filing their federal income tax returns.
If you hold your Fund shares through a broker (or other nominee), please contact that
broker (nominee) with respect to the reporting of cost basis and available elections for your account.
For more information about the cost basis methods offered by Invesco, please refer to the Tax Center located
under the Account Access & Forms menu of our website at www.invesco.com/us.
Wash sale rule. All or a portion of any loss so recognized may be deferred under the wash sale rules
if the shareholder purchases other shares of the Fund within 30 days before or after the
sale or redemption. Any loss disallowed under these rules will be added to your tax basis in the new Shares.
Sales at a loss within six months of purchase. Any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares.
Deferral of basis ― any class that bears a front-end sales load. If a shareholder (a) incurs a sales load in acquiring shares of the Fund, (b) disposes of such shares less than 91 days after
they are acquired, and (c) subsequently acquires shares of the Fund or another Fund by January 31 of the calendar
year following the calendar year in which the disposition of the original shares occurred at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired in connection with the acquisition
of the shares disposed of, then the sales load on the shares disposed of (to the extent of the reduction
in the sales load on the shares subsequently acquired) shall not be taken into account in determining gain
or loss on the shares disposed of, but shall be treated as incurred on the acquisition of the shares subsequently
acquired. The wash sale rules may also limit the amount of loss that may be taken into account on
disposition after such adjustment.
Reportable transactions. Under Treasury regulations, if a shareholder recognizes a loss with respect to the Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or certain greater amounts over a combination of years), the shareholder
must file with the IRS a disclosure statement on Form 8886. The fact that a loss is reportable under these
regulations does not affect
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the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of
their individual circumstances.
Tax Treatment of Portfolio Transactions. Set forth below is a general description of the tax treatment of certain types of securities, investment techniques and transactions that may apply
to a fund. This section should be read in conjunction with the discussion under “Description of the Fund and its Investments and Risks — Investment Strategies and Risks” for a detailed description of the various types of securities and investment techniques that apply to the Fund.
In general. In general, gain or loss recognized by a fund on the sale or other disposition of
portfolio investments will be a capital gain or loss. Such capital gain and loss may be long-term
or short-term depending, in general, upon the length of time a particular investment position is
maintained and, in some cases, upon the nature of the transaction. Property held for more than one year generally
will be eligible for long-term capital gain or loss treatment. The application of certain rules described
below may serve to alter the manner in which the holding period for a security is determined or may otherwise
affect the characterization as long-term or short-term, and also the timing of the realization
and/or character, of certain gains or losses.
Certain fixed-income investments. Gain recognized on the disposition of a debt obligation purchased by a fund at a market discount (generally, at a price less than its principal amount) will
be treated as ordinary income to the extent of the portion of the market discount that accrued during the
period of time the fund held the debt obligation unless the fund made a current inclusion election to accrue market
discount into income as it accrues. If a fund purchases a debt obligation (such as a zero coupon security
or pay-in-kind security) that was originally issued at a discount, the fund generally is required to include in
gross income each year the portion of the original issue discount that accrues during such year. Therefore, a fund’s investment in such securities may cause the fund to recognize income and make distributions to shareholders
before it receives any cash payments on the securities. To generate cash to satisfy those distribution
requirements, a fund may have to sell portfolio securities that it otherwise might have continued to hold or
to use cash flows from other sources such as the sale of fund shares.
Investments in debt obligations that are at risk of or in default present tax issues
for a fund. Tax rules are not entirely clear about issues such as whether and to what extent a fund should recognize
market discount on a debt obligation, when a fund may cease to accrue interest, original issue discount
or market discount, when and to what extent a fund may take deductions for bad debts or worthless securities
and how a fund should allocate payments received on obligations in default between principal and
income. These and other related issues will be addressed by a fund in order to ensure that it distributes
sufficient income to preserve its status as a regulated investment company.
Options, futures, forward contracts, swap agreements and hedging transactions. In general, option premiums received by a fund are not immediately included in the income of the fund.
Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder,
or the fund transfers or otherwise terminates the option (e.g., through a closing transaction). If an option
written by a fund is exercised and the fund sells or delivers the underlying stock, the fund generally will recognize
capital gain or loss equal to (a) the sum of the strike price and the option premium received by the fund minus (b) the fund’s basis in the stock. Such gain or loss generally will be short-term or long-term depending upon
the holding period of the underlying stock. If securities are purchased by a fund pursuant to the exercise of
a put option written by it, the fund generally will subtract the premium received from its cost basis in the securities
purchased. The gain or loss with respect to any termination of a fund’s obligation under an option other than through the exercise of the option and related sale or delivery of the underlying stock generally will
be short-term gain or loss depending on whether the premium income received by the fund is greater or less than
the amount paid by the fund (if any) in terminating the transaction. Thus, for example, if an option
written by a fund expires unexercised, the fund generally will recognize short-term gain equal to the premium
received.
The tax treatment of certain futures contracts entered into by a fund as well as listed
non-equity options written or purchased by the fund on U.S. exchanges (including options on futures contracts,
broad-based equity indices and debt securities) may be governed by section 1256 of the Code (section
1256 contracts).
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Gains or losses on section 1256 contracts generally are considered 60% long-term and
40% short-term capital gains or losses (60/40), although certain foreign currency gains and losses
from such contracts may be treated as ordinary in character. Also, any section 1256 contracts held by a fund
at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are “marked-to-market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.
Section 1256 contracts do not include any interest rate swap, currency swap, basis swap, interest
rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar
agreement.
In addition to the special rules described above in respect of options and futures transactions, a fund’s transactions in other derivative instruments (including options, forward contracts
and swap agreements) as well as its other hedging, short sale, or similar transactions, may be subject to
one or more special tax rules (including the constructive sale, notional principal contract, straddle, wash sale
and short sale rules). These rules may affect whether gains and losses recognized by a fund are treated as ordinary
or capital or as short-term or long-term, accelerate the recognition of income or gains to the fund, defer losses
to the fund, and cause adjustments in the holding periods of the fund’s securities. These rules, therefore, could affect the amount, timing and/or character of distributions to shareholders. Moreover, because
the tax rules applicable to derivative financial instruments are in some cases uncertain under current law,
an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance
could be retroactive) may affect whether a fund has made sufficient distributions and otherwise satisfied
the relevant requirements to maintain its qualification as a regulated investment company and avoid a fund-level
tax.
Certain of a fund’s investments in derivatives and foreign currency-denominated instruments, and the fund’s transactions in foreign currencies and hedging activities, may produce a difference between its book income and its taxable income. If a fund’s book income is less than the sum of its taxable income and net tax-exempt income (if any), the fund could be required to make distributions exceeding book
income to qualify as a regulated investment company. If a fund’s book income exceeds the sum of its taxable income and net tax-exempt income (if any), the distribution of any such excess will be treated as (i) a dividend
to the extent of the fund’s remaining earnings and profits (including current earnings and profits arising from tax-exempt income, reduced by related deductions), (ii) thereafter, as a return of capital to the extent of the recipient’s basis in the shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset.
Treasury Inflation Protected Securities. Adjustments for inflation to the principal amount of an inflation-protected U.S. Treasury bond held by the Fund may be included for tax purposes in the Fund’s gross income, even though no cash attributable to such gross income has been received by the Fund.
In addition, adjustments during the taxable year for deflation to an inflation-indexed bond held
by the Fund may cause amounts previously distributed in the taxable year as income to be characterized as
a return of capital.
Foreign currency transactions. A fund’s transactions in foreign currencies, foreign currency-denominated debt obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or
loss results from fluctuations in the value of the foreign currency concerned. This treatment could increase or decrease a fund’s ordinary income distributions to you, and may cause some or all of the fund’s previously distributed income to be classified as a return of capital. In certain cases, a fund may make an election
to treat such gain or loss as capital.
PFIC investments. A fund may invest in securities of foreign companies that may be classified under
the Code as PFICs. In general, a foreign company is classified as a PFIC if at least one-half
of its assets constitute investment-type assets or 75% or more of its gross income is investment-type
income. When investing in PFIC securities, a fund intends to mark-to-market these securities under
certain provisions of the Code and recognize any unrealized gains as ordinary income at the end of the fund’s fiscal and excise tax years. Deductions for losses are allowable only to the extent of any current or previously
recognized gains. These gains (reduced by allowable losses) are treated as ordinary income that a fund
is required to distribute, even though it has not sold or received dividends from these securities. You should
also be aware that the designation of a foreign security as a PFIC security will cause its income dividends
to fall outside of the
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definition of qualified foreign corporation dividends. These dividends generally will
not qualify for the reduced rate of taxation on qualified dividends when distributed to you by a fund. Foreign
companies are not required to identify themselves as PFICs. Due to various complexities in identifying PFICs,
a fund can give no assurances that it will be able to identify portfolio securities in foreign corporations
that are PFICs in time for the fund to make a mark-to-market election. If a fund is unable to identify an investment
as a PFIC and thus does not make a mark-to-market election, the fund may be subject to U.S. federal income
tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the fund to its shareholders. Additional charges in the nature
of interest may be imposed on a fund in respect of deferred taxes arising from such distributions or gains.
Investments in non-U.S. REITs. While non-U.S. REITs often use complex acquisition structures that seek to minimize taxation in the source country, an investment by the Fund in a non-U.S.
REIT may subject the Fund, directly or indirectly, to corporate taxes, withholding taxes, transfer taxes
and other indirect taxes in the country in which the real estate acquired by the non-U.S. REIT is located. The Fund's
pro rata share of any such taxes will reduce the Fund's return on its investment. The Fund's investment
in a non-U.S. REIT may be considered an investment in a PFIC, as discussed above in "Tax Treatment of Portfolio
Transactions - PFIC Investments". Additionally, foreign withholding taxes on distributions from the non-U.S.
REIT may be reduced or eliminated under certain tax treaties as discussed above in "Taxation of the Fund
- Foreign income tax". Also, the Fund in certain limited circumstances may be required to file an income
tax return in the source country and pay tax on any gain realized from its investment in the non-U.S. REIT
under rules similar to those in the United States which tax foreign persons on gain realized from dispositions
of interests in U.S. real estate.
Investments in U.S. REITs. A U.S. REIT is not subject to federal income tax on the income and gains it distributes to shareholders. Dividends paid by a U.S. REIT, other than capital gain
distributions, will be taxable as ordinary income up to the amount of the U.S. REIT’s current and accumulated earnings and profits. Capital gain dividends paid by a U.S. REIT to a fund will be treated as long-term capital
gains by the fund and, in turn, may be distributed by the fund to its shareholders as a capital gain distribution. Because
of certain noncash expenses, such as property depreciation, an equity U.S. REIT’s cash flow may exceed its taxable income. The equity U.S. REIT, and in turn a fund, may distribute this excess cash to shareholders
in the form of a return of capital distribution. However, if a U.S. REIT is operated in a manner that
fails to qualify as a REIT, an investment in the U.S. REIT would become subject to double taxation, meaning the taxable
income of the U.S. REIT would be subject to federal income tax at the corporate income tax rate
without any deduction for dividends paid to shareholders and the dividends would be taxable to shareholders
as ordinary income (or possibly as qualified dividend income) to the extent of the U.S. REIT’s current and accumulated earnings and profits. Also, see “Tax Treatment of Portfolio Transactions — Investment in taxable mortgage pools (excess inclusion income)” and "Foreign Shareholders — U.S. withholding tax at the source" with respect to certain other tax aspects of investing in U.S. REITs.
Investment in taxable mortgage pools (excess inclusion income). Under a Notice issued by the IRS, the Code and Treasury regulations to be issued, a portion of a fund’s income from a U.S. REIT that is attributable to the REIT’s residual interest in a real estate mortgage investment conduit (REMIC) or equity interests in a “taxable mortgage pool” (referred to in the Code as an excess inclusion) will be subject to federal income tax in all events. The excess inclusion income of a regulated investment company, such
as a fund, will be allocated to shareholders of the regulated investment company in proportion to the
dividends received by such shareholders, with the same consequences as if the shareholders held the related
REMIC residual interest or, if applicable, taxable mortgage pool directly. In general, excess inclusion
income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception
for certain thrift institutions), (ii) will constitute unrelated business taxable income (UBTI) to entities
(including qualified pension plans, individual retirement accounts, 401(k) plans, Keogh plans or other
tax-exempt entities) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess
inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay
tax on such income, and (iii) in the case of a foreign stockholder, will not qualify for any reduction in U.S. federal
withholding tax. In addition, if at any time during any taxable year a “disqualified organization” (which generally includes certain
110
cooperatives, governmental entities, and tax-exempt organizations not subject to tax
on UBTI) is a record holder of a share in a regulated investment company, then the regulated investment
company will be subject to a tax equal to that portion of its excess inclusion income for the taxable year
that is allocable to the disqualified organization, multiplied by the corporate income tax rate. The Notice
imposes certain reporting requirements upon regulated investment companies that have excess inclusion income.
Code Section 860E(f) further provides that, except as provided in regulations (which have not been
issued), with respect to any variable contract (as defined in section 817), there shall be no adjustment in
the reserve to the extent of any excess inclusion. There can be no assurance that a fund will not allocate to shareholders
excess inclusion income.
These rules are potentially applicable to a fund with respect to any income it receives
from the equity interests of certain mortgage pooling vehicles, either directly or, as is more likely,
through an investment in a U.S. REIT. It is unlikely that these rules will apply to a fund that has a non-REIT
strategy.
Investments in partnerships and QPTPs. For purposes of the Income Requirement, income derived by a fund from a partnership that is not a QPTP will be treated as qualifying income only
to the extent such income is attributable to items of income of the partnership that would be qualifying income
if realized directly by the fund. While the rules are not entirely clear with respect to a fund investing in a
partnership outside a master-feeder structure, for purposes of testing whether a fund satisfies the Asset Diversification
Test, the fund generally is treated as owning a pro rata share of the underlying assets of a partnership. See “Taxation of the Fund — Qualification as a regulated investment company.” In contrast, different rules apply to a partnership that is a QPTP. A QPTP is a partnership (a) the interests in which are traded on an
established securities market, (b) that is treated as a partnership for federal income tax purposes, and
(c) that derives less than 90% of its income from sources that satisfy the Income Requirement (e.g., because it invests
in commodities). All of the net income derived by a fund from an interest in a QPTP will be treated as
qualifying income but the fund may not invest more than 25% of its total assets in one or more QPTPs. However,
there can be no assurance that a partnership classified as a QPTP in one year will qualify as a QPTP
in the next year. Any such failure to annually qualify as a QPTP might, in turn, cause a fund to fail to
qualify as a regulated investment company. Although, in general, the passive loss rules of the Code do not
apply to RICs, such rules do apply to a fund with respect to items attributable to an interest in a QPTP. Fund
investments in partnerships, including in QPTPs, may result in the fund being subject to state, local
or foreign income, franchise or withholding tax liabilities.
If an MLP is treated as a partnership for U.S. federal income tax purposes (whether
or not a QPTP), all or portion of the dividends received by a fund from the MLP likely will be treated as
a return of capital for U.S. federal income tax purposes because of accelerated deductions available with respect
to the activities of such MLPs. Further, because of these accelerated deductions, on the disposition of interests
in such an MLP, a fund likely will realize taxable income in excess of economic gain with respect to
those MLP interests (or if the fund does not dispose of the MLP, the fund could realize taxable income in excess
of cash flow with respect to the MLP in a later period), and the fund must take such income into account in determining
whether the fund has satisfied its Distribution Requirement. A fund may have to borrow or liquidate
securities to satisfy its Distribution Requirement and to meet its redemption requests, even though investment
considerations might otherwise make it undesirable for the fund to sell securities or borrow money at such
time. In addition, any gain recognized, either upon the sale of a fund’s MLP interest or sale by the MLP of property held by it, including in excess of economic gain thereon, treated as so-called “recapture income,” will be treated as ordinary income. Therefore, to the extent a fund invests in MLPs, fund shareholders
might receive greater amounts of distributions from the fund taxable as ordinary income than they otherwise
would in the absence of such MLP investments.
Although MLPs are generally expected to be treated as partnerships for U.S. federal
income tax purposes, some MLPs may be treated as PFICs or “regular” corporations for U.S. federal income tax purposes. The treatment of particular MLPs for U.S. federal income tax purposes will
affect the extent to which a fund can invest in MLPs and will impact the amount, character, and timing
of income recognized by the Fund.
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Investments in convertible securities. Convertible debt is ordinarily treated as a “single property” consisting of a pure debt interest until conversion, after which the investment becomes
an equity interest. If the security is issued at a premium (i.e., for cash in excess of the face amount payable
on retirement), the creditor-holder may amortize the premium over the life of the bond. If the security
is issued for cash at a price below its face amount, the creditor-holder must accrue original issue discount in
income over the life of the debt. The creditor-holder’s exercise of the conversion privilege is treated as a nontaxable event. Mandatorily convertible debt (e.g., an exchange-traded note or ETN issued in the form of an unsecured
obligation that pays a return based on the performance of a specified market index, exchange currency,
or commodity) is often, but not always, treated as a contract to buy or sell the reference property
rather than debt. Similarly, convertible preferred stock with a mandatory conversion feature is ordinarily, but
not always, treated as equity rather than debt. Dividends received may be qualified dividend income and eligible
for the corporate dividends-received deduction. In general, conversion of preferred stock for common
stock of the same corporation is tax-free. Conversion of preferred stock for cash is a taxable redemption.
Any redemption premium for preferred stock that is redeemable by the issuing company might be required
to be amortized under original issue discount principles. A change in the conversion ratio or conversion
price of a convertible security on account of a dividend paid to the issuer’s other shareholders may result in a deemed distribution of stock to the holders of the convertible security equal to the value of their increased
interest in the equity of the issuer. Thus, an increase in the conversion ratio of a convertible security can
be treated as a taxable distribution of stock to a holder of the convertible security (without a corresponding
receipt of cash by the holder) before the holder has converted the security.
Tax Certification and Backup Withholding. Tax certification and backup withholding tax laws may require that you certify your tax information when you become an investor in the Fund.
For U.S. citizens and resident aliens, this certification is made on IRS Form W-9. Under these laws, the
Fund must withhold a portion of your taxable distributions and sales proceeds unless you:
●
provide your correct Social Security or taxpayer identification number;
●
certify that this number is correct;
●
certify that you are not subject to backup withholding; and
●
certify that you are a U.S. person (including a U.S. resident alien).
The Fund also must withhold if the IRS instructs it to do so. When withholding is
required, the amount will be 24% of any distributions or proceeds paid. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability, provided the appropriate information is furnished to the IRS. Certain payees and payments are exempt from backup
withholding and information reporting.
Non-U.S. investors have special U.S. tax certification requirements. See “Foreign Shareholders — Tax certification and backup withholding.”
Foreign Shareholders. Shareholders who, as to the United States, are nonresident alien individuals, foreign trusts or estates, foreign corporations, or foreign partnerships (foreign
shareholder), may be subject to U.S. withholding and estate tax and are subject to special U.S. tax certification
requirements.
Taxation of a foreign shareholder depends on whether the income from the Fund is “effectively connected” with a U.S. trade or business carried on by such shareholder.
U.S. withholding tax at the source. If the income from the Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, distributions to such shareholder
will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of
the distribution, subject to certain exemptions including those for dividends reported by the Fund to shareholders
as:
●
exempt-interest dividends paid by the Fund from its net interest income earned on
municipal securities;
●
capital gain dividends paid by the Fund from its net long-term capital gains (other
than those from
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disposition of a U.S. real property interest), unless you are a nonresident alien
present in the United States for a period or periods aggregating 183 days or more during the calendar year;
and
●
interest-related dividends paid by the Fund from its qualified net interest income
from U.S. sources and short-term capital gain dividends.
However, the Fund does not intend to utilize the exemptions for interest-related dividends
paid and short-term capital gain dividends paid. Moreover, notwithstanding such exemptions from U.S.
withholding at the source, any dividends and distributions of income and capital gains, including the
proceeds from the sale of your Fund shares, will be subject to backup withholding at a rate of 24% if you fail
to properly certify that you are not a U.S. person.
Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the
income resulting from an election to pass-through foreign tax credits to shareholders, but may not
be able to claim a credit or deduction with respect to the withholding tax for the foreign tax treated as having
been paid by them.
Amounts reported by the Fund to shareholders as capital gain dividends (a) that are
attributable to certain capital gain dividends received from a qualified investment entity (QIE) (generally
defined as either (i) a U.S. REIT or (ii) a RIC classified as a “U.S. real property holding corporation” or which would be if the exceptions for holding 5% or less of a class of publicly traded shares or an interest in a domestically
controlled QIE did not apply), or (b) that are realized by the Fund on the sale of a “U.S. real property interest” (including gain realized on the sale of shares in a QIE other than one that is domestically controlled),
will not be exempt from U.S. federal income tax and may be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) if the Fund by reason of having a REIT strategy is classified as a QIE. If the Fund is
so classified, foreign shareholders owning more than 5% of the Fund’s shares may be treated as realizing gain from the disposition of a U.S. real property interest, causing Fund distributions to be subject to U.S.
withholding tax at the corporate income tax rate, and requiring the filing of a nonresident U.S. income tax
return. In addition, if the Fund is classified as a QIE, anti-avoidance rules apply to certain wash sale transactions.
Namely, if the Fund is a domestically controlled QIE and a foreign shareholder disposes of the Fund’s shares prior to the Fund paying a distribution attributable to the disposition of a U.S. real property interest
and the foreign shareholder later acquires an identical stock interest in a wash sale transaction, the foreign
shareholder may still be required to pay U.S. tax on the Fund’s distribution. Also, the sale of shares of the Fund, if classified as a “U.S. real property holding corporation,” could also be considered a sale of a U.S. real property interest with any resulting gain from such sale being subject to U.S. tax as income “effectively connected with a U.S. trade or business.”
Income effectively connected with a U.S. trade or business. If the income from the Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then
ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares
of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic
corporations and require the filing of a nonresident U.S. income tax return.
Tax certification and backup withholding. Foreign shareholders may have special U.S. tax certification requirements to avoid backup withholding (at a rate of 24%) and, if applicable, to
obtain the benefit of any income tax treaty between the foreign shareholder’s country of residence and the United States. To claim these tax benefits, the foreign shareholder must provide a properly completed Form
W-8BEN (or other Form W-8, where applicable, or their substitute forms) to establish his or her status as
a non-U.S. investor, to claim beneficial ownership over the assets in the account, and to claim, if applicable,
a reduced rate of or exemption from withholding tax under the applicable treaty. A Form W-8BEN provided without a
U.S. taxpayer identification number remains in effect for a period of three years beginning on the
date that it is signed and ending on the last day of the third succeeding calendar year. However, non-U.S. investors
must advise the Fund of any changes of circumstances that would render the information given on the
form incorrect, and must then provide a new W-8BEN to avoid the prospective application of backup withholding.
Forms W-8BEN with U.S. taxpayer identification numbers remain valid indefinitely, or until the
investor has a change of circumstances that renders the form incorrect and necessitates a new form and tax
certification. Certain payees and payments are exempt from backup withholding.
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Foreign Account Tax Compliance Act (FATCA). Under FATCA, the Fund will be required to withhold a 30% tax on income dividends made by the Fund to certain foreign entities, referred to
as foreign financial institutions (FFI) or non-financial foreign entities (NFFE). After December 31, 2018,
FATCA withholding also would have applied to certain capital gain distributions, return of capital distributions
and the proceeds arising from the sale of Fund shares; however, based on proposed regulations issued by the
IRS, which can be relied upon currently, such withholding is no longer required unless final regulations provide
otherwise (which is not expected). The FATCA withholding tax generally can be avoided: (a) by an FFI, if it
reports certain direct and indirect ownership of foreign financial accounts held by U.S. persons with the FFI
and (b) by an NFFE, if it: (i) certifies that it has no substantial U.S. persons as owners or (ii) if it does have
such owners, reporting information relating to them. The U.S. Treasury has negotiated intergovernmental agreements
(IGA) with certain countries and is in various stages of negotiations with a number of other
foreign countries with respect to one or more alternative approaches to implement FATCA.
An FFI can avoid FATCA withholding if it is deemed compliant or by becoming a “participating FFI,” which requires the FFI to enter into a U.S. tax compliance agreement with the IRS under
section 1471(b) of the Code (FFI agreement) under which it agrees to verify, report and disclose certain
of its U.S. accountholders and meet certain other specified requirements. The FFI will either report the specified
information about the U.S. accounts to the IRS, or, to the government of the FFI’s country of residence (pursuant to the terms and conditions of applicable law and an applicable IGA entered into between the U.S. and the FFI’s country of residence), which will, in turn, report the specified information to the IRS. An FFI
that is resident in a country that has entered into an IGA with the U.S. to implement FATCA will be exempt from
FATCA withholding provided that the FFI shareholder and the applicable foreign government comply with
the terms of such agreement.
An NFFE that is the beneficial owner of a payment from the Fund can avoid the FATCA
withholding tax generally by certifying that it does not have any substantial U.S. owners or by providing
the name, address and taxpayer identification number of each substantial U.S. owner. The NFFE will report
the information to the Fund or other applicable withholding agent, which will, in turn, report the information
to the IRS.
Such foreign shareholders also may fall into certain exempt, excepted or deemed compliant
categories as established by U.S. Treasury regulations, IGAs, and other guidance regarding FATCA.
An FFI or NFFE that invests in the Fund will need to provide the Fund with documentation properly certifying the entity’s status under FATCA in order to avoid FATCA withholding. Non-U.S. investors should consult
their own tax advisors regarding the impact of these requirements on their investment in the Fund. The requirements
imposed by FATCA are different from, and in addition to, the U.S. tax certification rules to
avoid backup withholding described above. Shareholders are urged to consult their tax advisors regarding the
application of these requirements to their own situation.
U.S. estate tax. Transfers by gift of shares of the Fund by a foreign shareholder who is a nonresident
alien individual will not be subject to U.S. federal gift tax. An individual who,
at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to
shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exemption applies.
If a treaty exemption is available, a decedent’s estate may nonetheless need to file a U.S. estate tax return to claim the exemption in order to obtain a U.S. federal transfer certificate. The transfer certificate will
identify the property (i.e., Fund shares) as to which the U.S. federal estate tax lien has been released. In the absence
of a treaty, there is a $13,000 statutory estate tax credit (equivalent to an estate with assets of $60,000).
Local Tax Considerations. Rules of state and local taxation of ordinary income, qualified dividend income and capital gain dividends may differ from the rules for U.S. federal income
taxation described above. Distributions may also be subject to additional state, local and foreign taxes depending on each shareholder’s particular situation.
114
DISTRIBUTION OF SECURITIES
Distributor
The Trust has entered into a master distribution agreement, as amended, relating to
the Fund (the Distribution Agreement) with Invesco Distributors, Inc. (Invesco Distributors), a
registered broker-dealer and a wholly-owned subsidiary of Invesco Ltd., pursuant to which Invesco Distributors acts
as the distributor of shares of the Fund. The address of Invesco Distributors is 11 Greenway Plaza, Suite
1000, Houston, TX 77046-1173. Certain trustees and officers of the Trust are affiliated with Invesco
Distributors. See “Management of the Trust.” In addition to the Fund, Invesco Distributors serves as distributor to many other mutual funds that are offered to retail investors.
The Distribution Agreement provides Invesco Distributors with the exclusive right
to distribute shares of the Fund on a continuous basis directly and through other broker-dealers and other
financial intermediaries with whom Invesco Distributors has entered into selected dealer and/or similar agreements.
Invesco Distributors has not undertaken to sell any specified number of shares of the Fund.
The Trust (on behalf of the Fund) or Invesco Distributors may terminate the Distribution
Agreement on 60 days’ written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal period ended February 29, 2024, including the notes thereto and the report of PricewaterhouseCoopers LLP thereon, are incorporated by reference to the annual report to shareholders contained in the Fund's Form N-CSR filed on May 2, 2024.
The portions of such Annual Report that are not specifically listed above are not
incorporated by reference into this SAI and are not a part of this Registration Statement.
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APPENDIX A - RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's,
S&P, and Fitch.
Moody's Long-Term Debt Ratings
Aaa: Obligations rated 'Aaa' are judged to be of the highest quality, subject to the
lowest level of credit risk.
Aa: Obligations rated 'Aa' are judged to be of high quality and are subject to very
low credit risk.
A: Obligations rated 'A' are judged to be upper-medium grade and are subject to low
credit risk.
Baa: Obligations rated 'Baa' are judged to be medium-grade and subject to moderate credit
risk and as such may possess certain speculative characteristics.
Ba: Obligations rated 'Ba' are judged to be speculative and are subject to substantial
credit risk.
B: Obligations rated 'B' are considered speculative and are subject to high credit
risk.
Caa: Obligations rated 'Caa' are judged to be speculative of poor standing and are subject
to very high credit risk.
Ca: Obligations rated 'Ca' are highly speculative and are likely in, or very near, default,
with some prospect of recovery of principal and interest.
C: Obligations rated 'C' are the lowest rated and are typically in default, with little
prospect for recovery of principal or interest.
Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification
from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in
the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms*.
* By their terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid
securities may also be subject to contractually allowable write-downs of principal that could result in
impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security
is an expression of the relative credit risk associated with that security.
Moody's Short-Term Prime Rating System
P-1: Ratings of Prime-1 reflect a superior ability to repay short-term obligations.
P-2: Ratings of Prime-2 reflect a strong ability to repay short-term obligations.
P-3: Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.
NP (Not Prime): Issuers (or supporting institutions) rated Not Prime do not fall within any of the
Prime rating categories.
Moody's MIG/VMIG US Short-Term Ratings
Short-Term Obligation Ratings
We use the global short-term Prime rating scale for commercial paper issued by US
municipalities and nonprofits. These commercial paper programs may be backed by external letters of credit
or liquidity facilities, or by an issuer’s self-liquidity.
For other short-term municipal obligations, we use one of two other short-term rating
scales, the Municipal Investment Grade (MIG) and Variable Municipal Investment Grade (VMIG) scales discussed
below.
A-1
We use the MIG scale for US municipal cash flow notes, bond anticipation notes and
certain other short-term obligations, which typically mature in three years or less. Under certain circumstances,
we use the MIG scale for bond anticipation notes with maturities of up to five years.
MIG 1: This designation denotes superior credit quality. Excellent protection is afforded
by established cash flows, highly reliable liquidity support, or demonstrated broad-based access
to the market for refinancing.
MIG 2: This designation denotes strong credit quality. Margins of protection are ample,
although not as large as in the preceding group.
MIG 3: This designation denotes acceptable credit quality. Liquidity and cash-flow protection
may be narrow, and market access for refinancing is likely to be less well-established.
SG: This designation denotes speculative-grade credit quality. Debt instruments in this
category may lack sufficient margins of protection.
VMIG Ratings
For variable rate demand obligations (VRDOs), Moody’s assigns both a long-term rating and a short-term payment obligation rating. The long-term rating addresses the issuer’s ability to meet scheduled principal and interest payments. The short-term payment obligation rating addresses the ability
of the issuer or the liquidity provider to meet any purchase price payment obligation resulting from optional tenders (“on demand”) and/or mandatory tenders of the VRDO. The short-term payment obligation rating uses the VMIG
scale. Transitions of VMIG ratings with conditional liquidity support differ from transitions of Prime
ratings reflecting the risk that external liquidity support will terminate if the issuer’s long-term rating drops below investment grade. Please see our methodology that discusses obligations with conditional liquidity support.
For VRDOs, we typically assign a VMIG rating if the frequency of the payment obligation
is less than every three years. If the frequency of the payment obligation is less than three years,
but the obligation is payable only with remarketing proceeds, the VMIG short-term rating is not assigned and it is denoted as “NR”.
Industrial development bonds in the US where the obligor is a corporate may carry
a VMIG rating that reflects Moody’s view of the relative likelihood of default and loss. In these cases, liquidity assessment is based on the liquidity of the corporate obligor.
VMIG Scale
VMIG 1: This designation denotes superior credit quality. Excellent protection is afforded
by the superior short-term credit strength of the liquidity provider and structural and legal protections.
VMIG 2: This designation denotes strong credit quality. Good protection is afforded by the
strong short-term credit strength of the liquidity provider and structural and legal protections.
VMIG 3: This designation denotes acceptable credit quality. Adequate protection is afforded
by the satisfactory short-term credit strength of the liquidity provider and structural and
legal protections.
SG: This designation denotes speculative-grade credit quality. Demand features rated
in this category may be supported by a liquidity provider that does not have a sufficiently strong
short-term rating or may lack the structural or legal protections.
Standard & Poor's Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on S&P Global Ratings’ analysis of the following considerations:
●
The likelihood of payment--the capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the obligation;
●
The nature and provisions of the financial obligation, and the promise we impute;
and
A-2
●
The protection afforded by, and relative position of, the financial obligation in
the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
An issue rating is an assessment of default risk but may incorporate an assessment
of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated
lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation may
apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating
company and holding company obligations.)
AAA: An obligation rated 'AAA' has the highest rating assigned by S&P Global Ratings.
The obligor's capacity to meet its financial commitments on the obligation is extremely strong.
AA: An obligation rated 'AA' differs from the highest-rated obligations only to a small
degree. The obligor's capacity to meet its financial commitments on the obligation is very strong.
A: An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial commitments on the obligation is still strong.
BBB: An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitments on the obligation.
BB, B, CCC, CC and C: Obligations rated 'BB', 'B', 'CCC' 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation
and 'C' the highest. While such obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposure to adverse conditions.
BB: An obligation rated 'BB' is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to the obligor's inadequate capacity to meet its financial commitments
on the obligation.
B: An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB', but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse
business, financial, or economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitments on the obligation.
CCC: An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its financial
commitments on the obligation. In the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial commitments on the obligation.
CC: An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC'
rating is used when a default has not yet occurred but S&P Global Ratings expects default to be a virtual
certainty, regardless of the anticipated time to default.
C: An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation
is expected to have lower relative seniority or lower ultimate recovery compared with obligations
that are rated higher.
D: An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid
capital instruments, the 'D' rating category is used when payments on an obligation are not
made on the date due, unless S&P Global Ratings believes that such payments will be made within five
business days in the absence of a stated grace period or within the earlier of the stated grace period
or 30 calendar days. The 'D' rating also will be used upon the filing of a bankruptcy petition or
the taking of similar action and where default on an obligation is a virtual certainty, for example due
to automatic stay provisions. An obligation's rating is lowered to 'D' if it is subject to a distressed
exchange offer.
A-3
Plus (+) or minus (-): The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
NR: This indicates that no rating has been requested, or that there is insufficient
information on which to base a rating, or that S&P Global Ratings does not rate a particular obligation as
a matter of policy.
Standard & Poor's Short-Term Issue Credit Ratings
A-1: A short-term obligation rated 'A-1' is rated in the highest category by S&P Global
Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's
capacity to meet its financial commitments on these obligations is extremely strong.
A-2: A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.
A-3: A short-term obligation rated 'A-3' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to weaken an obligor's
capacity to meet its financial commitments on the obligation.
B: A short-term obligation rated 'B' is regarded as vulnerable and has significant
speculative characteristics. The obligor currently has the capacity to meet its financial commitments;
however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity
to meet its financial commitments.
C: A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its
financial commitments on the obligation.
D: A short-term obligation rated 'D' is in default or in breach of an imputed promise.
For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation
are not made on the date due, unless S&P Global Ratings believes that such payments will be made within
any stated grace period. However, any stated grace period longer than five business days will be treated
as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or
the taking of a similar action and where default on an obligation is a virtual certainty, for example due
to automatic stay provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed
debt restructuring.
Standard & Poor's Municipal Short-Term Note Ratings Definitions
An S&P Global Ratings U.S. municipal note rating reflects S&P Global Ratings’ opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less
will likely receive a note rating. Notes with an original maturity of more than three years will most likely
receive a long-term debt rating. In determining which type of rating, if any, to assign, S&P Global Ratings’ analysis will review the following considerations:
●
Amortization schedule -- the larger final maturity relative to other maturities, the
more likely it will be treated as a note; and
●
Source of payment -- the more dependent the issue is on the market for its refinancing,
the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1: Strong capacity to pay principal and interest. An issue determined to possess a
very strong capacity to pay debt service is given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
A-4
SP-3: Speculative capacity to pay principal and interest.
D: ‘D’ is assigned upon failure to pay the note when due, completion of a distressed exchange offer, or the filing of a bankruptcy petition or the taking of similar action and where default
on an obligation is a virtual certainty, for example due to automatic stay provisions.
Standard & Poor's Dual Ratings
Dual ratings may be assigned to debt issues that have a put option or demand feature.
The first component of the rating addresses the likelihood of repayment of principal and interest
as due, and the second component of the rating addresses only the demand feature. The first component
of the rating can relate to either a short-term or long-term transaction and accordingly use either
short-term or long-term rating symbols. The second component of the rating relates to the put option and is assigned
a short-term rating symbol (for example, 'AAA/A-1+' or 'A-1+/A-1'). With U.S. municipal short-term demand
debt, the U.S. municipal short-term note rating symbols are used for the first component of the rating
(for example, 'SP-1+/A-1+').
Fitch Credit Rating Scales
Fitch Ratings publishes credit ratings that are forward-looking opinions on the relative
ability of an entity or obligation to meet financial commitments. Issuer default ratings (IDRs) are assigned
to corporations, sovereign entities, financial institutions such as banks, leasing companies and insurers,
and public finance entities (local and regional governments). Issue level ratings are also assigned,
often include an expectation of recovery and may be notched above or below the issuer level rating. Issue ratings
are assigned to secured and unsecured debt securities, loans, preferred stock and other instruments, Structured
finance ratings are issue ratings to securities backed by receivables or other financial assets that consider the obligations’ relative vulnerability to default. Credit ratings are indications of the likelihood
of repayment in accordance with the terms of the issuance. In limited cases, Fitch may include additional considerations
(i.e., rate to a higher or lower standard than that implied in the obligation’s documentation). Please see the section Specific Limitations Relating to Credit Rating Scales for details. Fitch Ratings also publishes
other ratings, scores and opinions. For example, Fitch provides specialized ratings of servicers of residential
and commercial mortgages, asset managers and funds. In each case, users should refer to the definitions
of each individual scale for guidance on the dimensions of risk covered in each assessment.
Fitch’s credit rating scale for issuers and issues is expressed using the categories ‘AAA’ to ‘BBB’ (investment grade) and ‘BB’ to ‘D’ (speculative grade) with an additional +/-for AA through CCC levels indicating relative differences of probability of default or recovery for issues.
The terms “investment grade” and “speculative grade” are market conventions and do not imply any recommendation or endorsement of a specific security for investment purposes. Investment
grade categories indicate relatively low to moderate credit risk, while ratings in the speculative
categories signal either a higher level of credit risk or that a default has already occurred.
Fitch may also disclose issues relating to a rated issuer that are not and have not
been rated. Such issues are also denoted as ‘NR’ on its web page.
Credit ratings express risk in relative rank order, which is to say they are ordinal
measures of credit risk and are not predictive of a specific frequency of default or loss. For information
about the historical performance of ratings, please refer to Fitch’s Ratings Transition and Default studies, which detail the historical default rates. The European Securities and Markets Authority also maintains
a central repository of historical default rates.
Fitch’s credit ratings do not directly address any risk other than credit risk. Credit ratings do not deal with the risk of market value loss due to changes in interest rates, liquidity and/or other
market considerations. However, market risk may be considered to the extent that it influences the ability
of an issuer to pay or refinance a financial commitment. Ratings nonetheless do not reflect market risk to
the extent that they
A-5
influence the size or other conditionality of the obligation to pay upon a commitment
(for example, in the case of payments linked to performance of an equity index).
Fitch will use credit rating scales to provide ratings to privately issued obligations
or certain note issuance programs, or for private ratings using the same public scale and criteria. Private
ratings are not published, and are only provided to the issuer or its agents in the form of a rating letter. The
primary credit rating scales may also be used to provide ratings for a narrower scope, including interest strips and
return of principal or in other forms of opinions such as Credit Opinions or Rating Assessment Services.
Credit Opinions are either a notch- or category-specific view using the primary rating
scale and omit one or more characteristics of a full rating or meet them to a different standard. Credit
Opinions will be indicated using a lower-case letter symbol combined with either an ‘*’ (e.g. ‘bbb+*’) or (cat) suffix to denote the opinion status. Credit Opinions will be typically point-in-time but may be monitored if the
analytical group believes information will be sufficiently available.
Rating Assessment Services are a notch-specific view using the primary rating scale
of how an existing or potential rating may be changed by a given set of hypothetical circumstances. While
Credit Opinions and Rating Assessment Services are point-in-time and are not monitored, they may have
a directional Watch or Outlook assigned, which can signify the trajectory of the credit profile.
Ratings assigned by Fitch are opinions based on established, approved and published
criteria. A variation to criteria may be applied but will be explicitly cited in our rating action commentaries
(RACs), which are used to publish credit ratings when established and upon annual or periodic reviews.
Ratings are the collective work product of Fitch, and no individual, or group of individuals,
is solely responsible for a rating. Ratings are not facts and, therefore, cannot be described
as being "accurate" or "inaccurate." Users should refer to the definition of each individual rating for guidance
on the dimensions of risk covered by the rating.
Fitch Long-Term Rating Scales
Issuer Default Ratings
Rated entities in a number of sectors, including financial and non-financial corporations,
sovereigns, insurance companies and certain sectors within public finance, are generally assigned
Issuer Default Ratings (IDRs). IDRs are also assigned to certain entities in global infrastructure and project
finance. IDRs opine on an entity's relative vulnerability to default on financial obligations. The threshold
default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect
the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative
receivership or similar concepts.
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency's view
of their relative vulnerability to default, rather than a prediction of a specific percentage likelihood
of default.
AAA: Highest credit quality.
'AAA' ratings denote the lowest expectation of default risk. They are assigned only
in cases of exceptionally strong capacity for payment of financial commitments. This capacity
is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality.
'AA' ratings denote expectations of very low default risk. They indicate very strong
capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable
events.
A-6
A: High credit quality.
'A' ratings denote expectations of low default risk. The capacity for payment of financial
commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher ratings.
BBB: Good credit quality.
'BBB' ratings indicate that expectations of default risk are currently low. The capacity
for payment of financial commitments is considered adequate, but adverse business or economic conditions
are more likely to impair this capacity.
BB: Speculative.
'BB' ratings indicate an elevated vulnerability to default risk, particularly in the
event of adverse changes in business or economic conditions over time; however, business or financial flexibility
exists that supports the servicing of financial commitments.
B: Highly speculative.
'B' ratings indicate that material default risk is present, but a limited margin of
safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable
to deterioration in the business and economic environment.
CCC: Substantial credit risk.
Very low margin of safety. Default is a real possibility.
CC: Very high levels of credit risk.
Default of some kind appears probable.
C: Near default
A default or default-like process has begun, or the issuer is in standstill, or for
a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a 'C'
category rating for an issuer include:
a. the issuer has entered into a grace or cure period following non-payment of a material
financial obligation;
b. the issuer has entered into a temporary negotiated waiver or standstill agreement
following a payment default on a material financial obligation; or
c. the formal announcement by the issuer or their agent of a distressed debt exchange;
d. a closed financing vehicle where payment capacity is irrevocably impaired such
that it is not expected to pay interest and/or principal in full during the life of the transaction, but where
no payment default is imminent
RD: Restricted default.
‘RD’ ratings indicate an issuer that in Fitch’s opinion has experienced:
a. an uncured payment default or distressed debt exchange on a bond, loan or other
material financial obligation, but
b. has not entered into bankruptcy filings, administration, receivership, liquidation,
or other formal winding-up procedure, and
c. has not otherwise ceased operating.
This would include:
A-7
i. the selective payment default on a specific class or currency of debt;
ii. the uncured expiry of any applicable grace period, cure period or default forbearance
period following a payment default on a bank loan, capital markets security or other material financial
obligation;
iii. the extension of multiple waivers or forbearance periods upon a payment default
on one or more material financial obligations, either in series or in parallel; ordinary execution
of a distressed debt exchange on one or more material financial obligations.
D: Default.
'D' ratings indicate an issuer that in Fitch Ratings' opinion has entered into bankruptcy
filings, administration, receivership, liquidation or other formal winding-up procedure or
which has otherwise ceased business.
Default ratings are not assigned prospectively to entities or their obligations; within
this context, non-payment on an instrument that contains a deferral feature or grace period will generally
not be considered a default until after the expiration of the deferral or grace period, unless a default
is otherwise driven by bankruptcy or other similar circumstance, or by a distressed debt exchange.
In all cases, the assignment of a default rating reflects the agency's opinion as
to the most appropriate rating category consistent with the rest of its universe of ratings and may differ
from the definition of default under the terms of an issuer's financial obligations or local commercial practice.
Notes
The modifiers + or - may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the 'AAA' Long-Term IDR category, or to Long-Term IDR
categories below 'B'.
Fitch Short-Term Ratings Assigned to Issuers and Obligations
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability
to default of the rated entity and relates to the capacity to meet financial obligations in accordance
with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for
loss severity. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as "short term"
based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured
obligations and up to 36 months for obligations in U.S. public finance markets.
F1: Highest Short-Term Credit Quality. Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency’s National Rating scale, this rating is assigned to the lowest default risk relative to other
in the same country or monetary union. Where the liquidity profile is particularly strong, a “+” is added to the assigned rating.
F2: Good Short-Term Credit Quality. Indicates a good capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union. However, the margin of safety is not as great as in the case of the higher ratings.
F3: Fair Short-Term Credit Quality. Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union.
B: Speculative Short-Term Credit Quality. Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country
or monetary union.
C: High Short-Term Default Risk. Indicates a highly uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary
union.
RD: Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable
to entity ratings only.
D: Default. Indicates a broad-based default event for an entity, or the default of a short-term
obligation.
A-8
APPENDIX B - PERSONS TO WHOM INVESCO PROVIDES NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS
(as of May 31, 2023)
|
Service Provider
|
Disclosure Category
|
|
ABN AMRO Financial Services, Inc.
|
Broker (for certain Invesco Funds)
|
|
Absolute Color
|
Financial Printer
|
|
Anglemyer & Co.
|
Analyst (for certain Invesco Funds)
|
|
AXA
|
Other
|
|
Ballard Spahr Andrews & Ingersoll,
LLP
|
Special Insurance Counsel
|
|
Barclays Capital, Inc.
|
Broker (for certain Invesco Funds)
|
|
Blaylock Robert Van LLC
|
Broker (for certain Invesco Funds)
|
|
BB&T Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Bear Stearns Pricing Direct, Inc.
|
Pricing Vendor (for certain Invesco Funds)
|
|
BLNS Securities Ltd.
|
Broker (for certain Invesco Funds)
|
|
BOSC, Inc.
|
Broker (for certain Invesco Funds)
|
|
Brown Brothers Harriman & Co.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
Cabrera Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Charles River Systems, Inc.
|
System Provider
|
|
Chas. P. Young Co.
|
Financial Printer
|
|
Cirrus Research, LLC
|
Trading System
|
|
Citibank, N.A.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
Citigroup Global Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Commerce Capital Markets
|
Broker (for certain Invesco Funds)
|
|
Crane Data, LLC
|
Analyst (for certain Invesco Funds)
|
|
Credit Suisse International / Credit
Suisse Securities (Europe) Ltd.
|
Service Provider
|
|
Crews & Associates
|
Broker (for certain Invesco Funds)
|
|
D.A. Davidson & Co.
|
Broker (for certain Invesco Funds)
|
|
Dechert LLP
|
Legal Counsel
|
|
DEPFA First Albany
|
Broker (for certain Invesco Funds)
|
|
Deutsche Bank Trust Company
Americas
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
E.K. Riley Investments LLC
|
Broker (for certain Invesco Funds)
|
|
Empirical Research Partners
|
Analyst (for certain Invesco Funds)
|
|
Finacorp Securities
|
Broker (for certain Invesco Funds)
|
|
First Miami Securities
|
Broker (for certain Invesco Funds)
|
|
First Southwest Co.
|
Broker (for certain Invesco Funds)
|
|
First Tryon Securities
|
Broker (for certain Invesco Funds)
|
|
Fitch, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
FT Interactive Data Corporation
|
Pricing Vendor
|
|
FTN Financial Group
|
Broker (for certain Invesco Funds)
|
|
GainsKeeper
|
Software Provider (for certain Invesco Funds)
|
|
GCom2 Solutions
|
Software Provider (for certain Invesco Funds)
|
|
George K. Baum & Company
|
Broker (for certain Invesco Funds)
|
|
Glass, Lewis & Co.
|
System Provider (for certain Invesco Funds)
|
|
Global Trading Analytics, LLC
|
Software Provider
|
|
Global Trend Alert
|
Analyst (for certain Invesco Funds)
|
|
Hattier, Sanford & Reynoir
|
Broker (for certain Invesco Funds)
|
|
Hutchinson, Shockey, Erley & Co.
|
Broker (for certain Invesco Funds)
|
|
ICI (Investment Company Institute)
|
Analyst (for certain Invesco Funds)
|
|
ICRA Online Ltd.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
B-1
|
Service Provider
|
Disclosure Category
|
|
Lincoln Investment Advisors
Corporation
|
Other
|
|
iMoneyNet, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Initram Data, Inc.
|
Pricing Vendor
|
|
Institutional Shareholder Services,
Inc.
|
Proxy Voting Service (for certain Invesco Funds)
|
|
Invesco Investment Services, Inc.
|
Transfer Agent
|
|
Invesco Senior Secured
Management, Inc.
|
System Provider (for certain Invesco Funds)
|
|
Investment Company Institute
|
Analyst (for certain Invesco Funds)
|
|
Investortools, Inc.
|
Broker (for certain Invesco Funds)
|
|
ITG, Inc.
|
Pricing Vendor (for certain Invesco Funds)
|
|
J.P. Morgan Chase Bank
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
J.P. Morgan Securities, Inc.
|
Analyst (for certain Invesco Funds)
|
|
J.P. Morgan Securities Inc./Citigroup
Global Markets Inc./JPMorgan
Chase Bank, N.A.
|
Lender (for certain Invesco Funds)
|
|
J.P. Morgan Securities
|
Broker (for certain Invesco Funds)
|
|
Janney Montgomery Scott LLC
|
Broker (for certain Invesco Funds)
|
|
John Hancock Investment
Management Services, LLC
|
Sub-advisor (for certain sub-advised accounts)
|
|
Jorden Burt LLP
|
Special Insurance Counsel
|
|
KeyBanc Capital Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Kramer Levin Naftalis & Frankel LLP
|
Legal Counsel
|
|
Lebenthal & Co. LLC
|
Broker (for certain Invesco Funds)
|
|
Lipper, Inc.
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Loan Pricing Corporation
|
Pricing Service (for certain Invesco Funds)
|
|
Loop Capital Markets
|
Broker (for certain Invesco Funds)
|
|
M.R. Beal
|
Broker (for certain Invesco Funds)
|
|
MarkIt Group Limited
|
Pricing Vendor (for certain Invesco Funds)
|
|
Merrill Communications LLC
|
Financial Printer
|
|
Mesirow Financial, Inc.
|
Broker (for certain Invesco Funds)
|
|
Middle Office Solutions
|
Software Provider
|
|
Moody's Investors Service
|
Rating & Ranking Agency (for certain Invesco Funds)
|
|
Morgan Keegan & Company, Inc.
|
Broker (for certain Invesco Funds)
|
|
Morrison Foerster LLP
|
Legal Counsel
|
|
MS Securities Services, Inc. and
Morgan Stanley & Co. Incorporated
|
Securities Lender (for certain Invesco Funds)
|
|
Muzea Insider Consulting Services,
LLC
|
Analyst (for certain Invesco Funds)
|
|
Ness USA Inc.
|
System provider
|
|
Noah Financial, LLC
|
Analyst (for certain Invesco Funds)
|
|
Omgeo LLC
|
Trading System
|
|
Piper Jaffray
|
Analyst (for certain Invesco Funds)
|
|
Prager, Sealy & Co.
|
Broker (for certain Invesco Funds)
|
|
PricewaterhouseCoopers LLP
|
Independent Registered Public Accounting Firm (for all Invesco Funds)
|
|
Protective Securities
|
Broker (for certain Invesco Funds)
|
|
Ramirez & Co., Inc.
|
Broker (for certain Invesco Funds)
|
|
Raymond James & Associates, Inc.
|
Broker (for certain Invesco Funds)
|
|
RBC Capital Markets
|
Analyst (for certain Invesco Funds)
|
|
RBC Dain Rauscher Incorporated
|
Broker (for certain Invesco Funds)
|
|
Reuters America LLC
|
Pricing Service (for certain Invesco Funds)
|
|
Rice Financial Products
|
Broker (for certain Invesco Funds)
|
|
Robert W. Baird & Co. Incorporated
|
Broker (for certain Invesco Funds)
|
B-2
|
Service Provider
|
Disclosure Category
|
|
RR Donnelley Financial
|
Financial Printer
|
|
Ryan Beck & Co.
|
Broker (for certain Invesco Funds)
|
|
SAMCO Capital Markets, Inc.
|
Broker (for certain Invesco Funds)
|
|
Seattle-Northwest Securities
Corporation
|
Broker (for certain Invesco Funds)
|
|
Siebert Brandford Shank & Co.,
L.L.C.
|
Broker (for certain Invesco Funds)
|
|
Simon Printing Company
|
Financial Printer
|
|
Southwest Precision Printers, Inc.
|
Financial Printer
|
|
Southwest Securities
|
Broker (for certain Invesco Funds)
|
|
Standard and Poor's/Standard and
Poor's Securities Evaluations, Inc.
|
Pricing Service and Rating and Ranking Agency (each, respectively, for certain Invesco
Funds)
|
|
StarCompliance, Inc.
|
System Provider
|
|
State Street Bank and Trust
Company
|
Custodian, Lender, Securities Lender, and System Provider (each, respectively, for
certain
Invesco Funds)
|
|
Sterne, Agee & Leach, Inc.
|
Broker (for certain Invesco Funds)
|
|
Stifel, Nicolaus & Company,
Incorporated
|
Broker (for certain Invesco Funds)
|
|
Stradley Ronon Stevens & Young,
LLP
|
Legal Counsel
|
|
The Bank of New York
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
The MacGregor Group, Inc.
|
Software Provider
|
|
The Savader Group LLC
|
Broker (for certain Invesco Funds)
|
|
Thomson Information Services
Incorporated
|
Software Provider
|
|
TradingHub Group Ltd.
|
Analyst (for certain Invesco Funds)
|
|
UBS Financial Services, Inc.
|
Broker (for certain Invesco Funds)
|
|
UMB Bank, N.A.
|
Custodian and Securities Lender (each, respectively, for certain Invesco Funds)
|
|
VCI Group Inc.
|
Financial Printer
|
|
Vining Sparks IBG
|
Broker (for Certain Invesco Funds)
|
|
W.H Mell Associates, Inc.
|
Broker (for certain Invesco Funds)
|
|
Wachovia National Bank, N.A.
|
Broker (for certain Invesco Funds)
|
|
Western Lithograph
|
Financial Printer
|
|
Wiley Bros. Aintree Capital L.L.C.
|
Broker (for certain Invesco Funds)
|
|
William Blair & Co.
|
Broker (for certain Invesco Funds)
|
|
XSP, LLC/Solutions Plus, Inc.
|
Software Provider
|
B-3
APPENDIX C - TRUSTEES AND OFFICERS
As of May 31, 2024
The address of each trustee and officer is 11 Greenway Plaza, Houston, Texas 77046-1173.
The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation,
retirement or removal as more specifically provided in the Trust's organizational documents. Each officer
serves for a one year term or until their successors are elected and qualified. Column two below includes length
of time served with predecessor entities, if any.
Interested Trustees
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Jeffrey H. Kupor1 - 1968
|
Trustee
|
2024
|
Senior Managing Director
and General Counsel,
Invesco Ltd.; Trustee,
Invesco Foundation, Inc.;
Director, Invesco Advisers,
Inc.; Executive Vice
President, Invesco Asset
Management (Bermuda),
Ltd. and Invesco
Investments (Bermuda)
Ltd.; and Vice President,
Invesco Group Services,
Inc.
Formerly: Head of Legal
of the Americas, Invesco
Ltd.; Senior Vice President
and Secretary, Invesco
Advisers, Inc. (formerly
known as Invesco
Institutional (N.A.), Inc.)
(registered investment
adviser); Secretary,
Invesco Distributors, Inc.
(formerly known as
Invesco AIM Distributors,
Inc.); Vice President and
Secretary, Invesco
Investment Services, Inc.
(formerly known as
Invesco AIM Investment
Services, Inc.); Senior
Vice President, Chief
Legal Officer and
Secretary, The Invesco
Funds; Secretary and
General Counsel, Invesco
Investment Advisers LLC
(formerly known as Van
Kampen Asset
Management); Secretary
and General Counsel,
Invesco Capital Markets,
Inc. (formerly known as
Van Kampen Funds Inc.)
|
164
|
None
|
C-1
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
and Chief Legal Officer,
Invesco Exchange-Traded
Fund Trust, Invesco
Exchange-Traded Fund
Trust II, Invesco India
Exchange-Traded Fund
Trust, Invesco Actively
Managed Exchange-
Traded Fund Trust,
Invesco Actively Managed
Exchange-Traded
Commodity Fund Trust
and Invesco Exchange-
Traded Self-Indexed Fund
Trust; Secretary and Vice
President, Harbourview
Asset Management
Corporation; Secretary
and Vice President,
Oppenheimer Funds, Inc.
and Invesco Managed
Accounts, LLC; Secretary
and Senior Vice President,
OFI Global Institutional,
Inc.; Secretary and Vice
President, OFI SteelPath,
Inc.; Secretary and Vice
President, Oppenheimer
Acquisition Corp.;
Secretary and Vice
President, Shareholder
Services, Inc.; Secretary
and Vice President, Trinity
Investment Management
Corporation, Senior Vice
President, Invesco
Distributors, Inc.;
Secretary and Vice
President, Jemstep, Inc.;
Head of Legal, Worldwide
Institutional, Invesco Ltd.;
Secretary and General
Counsel, INVESCO
Private Capital
Investments, Inc.; Senior
Vice President, Secretary
and General Counsel,
Invesco Management
Group, Inc. (formerly
known as Invesco AIM
Management Group, Inc.);
Assistant Secretary,
INVESCO Asset
Management (Bermuda)
Ltd.; Secretary and
General Counsel, Invesco
Private Capital, Inc.;
|
|
|
C-2
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
Assistant Secretary and
General Counsel,
INVESCO Realty, Inc.;
Secretary and General
Counsel, Invesco Senior
Secured Management,
Inc.; Secretary, Sovereign
G./P. Holdings Inc.;
Secretary, Invesco
Indexing LLC; and
Secretary, W.L. Ross &
Co., LLC
|
|
|
|
Douglas Sharp1– 1974
|
Trustee
|
2024
|
Senior Managing Director
and Head of Americas &
EMEA, Invesco Ltd.
Formerly: Director and
Chairman, Invesco UK
Limited; and Director,
Chairman and Chief
Executive, Invesco Fund
Managers Limited
|
164
|
None
|
1.
Mr. Kupor and Mr. Sharp are considered interested persons (within the meaning of the Section 2(a)(19) of the 1940 Act) of the Funds because they are officers of the Adviser, and officers of Invesco Ltd., the ultimate parent of the Adviser.
Independent Trustees
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
|
|
|
|
Beth Ann Brown – 1968
|
Trustee (2019)
and Chair
(2022)
|
2019
|
Independent Consultant
Formerly: Head of
Intermediary Distribution,
Managing Director,
Strategic Relations,
Managing Director, Head
of National Accounts,
Senior Vice President,
National Account Manager
and Senior Vice President,
Key Account Manager,
Columbia Management
Investment Advisers LLC;
and Vice President, Key
Account Manager, Liberty
Funds Distributor, Inc.
|
164
|
Director, Board of
Directors of Caron
Engineering Inc.
Formerly: Advisor,
Board of Advisors of
Caron Engineering
Inc.; President and
Director, Acton
Shapleigh Youth
Conservation Corps
(non-profit); President
and Director of
Grahamtastic
Connection (non-
profit).; and Trustee of
certain Oppenheimer
Funds
|
|
Carol Deckbar – 1962
|
Trustee
|
2024
|
Formerly: Executive Vice
President and Chief
Product Officer, TIAA
Financial Services;
|
164
|
Formerly: Board
Member, TIAA Asset
Management, Inc.; and
Board Member, TH
|
C-3
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
Executive Vice President
and Principal, College
Retirement Equities Fund
at TIAA; Executive Vice
President and Head of
Institutional Investments
and Endowment Services,
TIAA
|
|
Real Estate Group
Holdings Company
|
|
Cynthia Hostetler —1962
|
Trustee
|
2017
|
Non-Executive Director
and Trustee of a number
of public and private
business corporations
Formerly: Director,
Aberdeen Investment
Funds (4 portfolios);
Director, Artio Global
Investment LLC (mutual
fund complex); Director,
Edgen Group, Inc.
(specialized energy and
infrastructure products
distributor); Director,
Genesee & Wyoming, Inc.
(railroads); Head of
Investment Funds and
Private Equity, Overseas
Private Investment
Corporation; President,
First Manhattan
Bancorporation, Inc.; and
Attorney, Simpson
Thacher & Bartlett LLP
|
164
|
Resideo Technologies
(smart home
technology); Vulcan
Materials Company
(construction materials
company); Trilinc
Global Impact Fund;
Investment Company
Institute (professional
organization); and
Independent Directors
Council (professional
organization)
|
|
Eli Jones – 1961
|
Trustee
|
2016
|
Professor and Dean
Emeritus, Mays Business
School at Texas A&M
University
Formerly: Dean of Mays
Business School at Texas
A&M University; Professor
and Dean, Walton College
of Business, University of
Arkansas and E.J. Ourso
College of Business,
Louisiana State University;
and Director, Arvest Bank
|
164
|
Insperity, Inc. (formerly
known as Administaff)
(human resources
provider); Board
Member of the regional
board, First Financial
Bank Texas; and Board
Member, First Financial
Bankshares, Inc. Texas
|
|
Elizabeth Krentzman – 1959
|
Trustee
|
2019
|
Formerly: Principal and
Chief Regulatory Advisor
for Asset Management
Services and U.S. Mutual
Fund Leader of Deloitte &
Touche LLP; General
Counsel of the Investment
Company Institute (trade
|
164
|
Formerly: Member of
the Cartica Funds
Board of Directors
(private investment
funds); Trustee of the
University of Florida
National Board
Foundation; Member of
|
C-4
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
|
|
|
association); National
Director of the Investment
Management Regulatory
Consulting Practice,
Principal, Director and
Senior Manager of
Deloitte & Touche LLP;
Assistant Director of the
Division of Investment
Management - Office of
Disclosure and Investment
Adviser Regulation of the
U.S. Securities and
Exchange Commission
and various positions with
the Division of Investment
Management – Office of
Regulatory Policy of the
U.S. Securities and
Exchange Commission;
and Associate at Ropes &
Gray LLP
|
|
the University of
Florida Law Center
Association, Inc. Board
of Trustees, Audit
Committee and
Membership
Committee; and
Trustee of certain
Oppenheimer Funds
|
|
Anthony J. LaCava, Jr.–
1956
|
Trustee
|
2019
|
Formerly: Director and
Member of the Audit
Committee, Blue Hills
Bank (publicly traded
financial institution) and
Managing Partner, KPMG
LLP
|
164
|
Member and Chairman
of the Bentley
University Business
School Advisory
Council; Formerly:
Board Member and
Chair of the Audit and
Finance Committee
and Nominating
Committee, KPMG LLP
|
|
James “Jim” Liddy – 1959
|
Trustee
|
2024
|
Formerly: Chairman,
Global Financial Services,
Americas and Retired
Partner, KPMG LLP
|
164
|
Director and Treasurer,
Gulfside Place
Condominium
Association, Inc. and
Non-Executive
Director, Kellenberg
Memorial High School
|
|
Prema Mathai-Davis – 1950
|
Trustee
|
1998
|
Formerly: Co-Founder &
Partner of Quantalytics
Research, LLC, (a
FinTech Investment
Research Platform for the
Self-Directed Investor);
Trustee of YWCA
Retirement Fund; CEO of
YWCA of the USA; Board
member of the NY
Metropolitan
Transportation Authority;
Commissioner of the NYC
Department of Aging; and
Board member of Johns
Hopkins Bioethics Institute
|
164
|
Member of Board of
Positive Planet US
(non-profit) and
HealthCare Chaplaincy
Network (non-profit)
|
C-5
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Joel W. Motley – 1952
|
Trustee
|
2019
|
Director of Office of
Finance, Federal Home
Loan Bank System;
Managing Director of
Carmona Motley Inc.
(privately held financial
advisor); Member of the
Council on Foreign
Relations and its Finance
and Budget Committee;
Chairman Emeritus of
Board of Human Rights
Watch and Member of its
Investment Committee;
Member of Investment
Committee and Board of
Historic Hudson Valley
(non-profit cultural
organization); and
Member of the Vestry and
Investment Committee of
Trinity Church Wall Street
Formerly: Managing
Director of Public Capital
Advisors, LLC (privately
held financial advisor);
Managing Director of
Carmona Motley Hoffman,
Inc. (privately held
financial advisor); and
Director of Columbia
Equity Financial Corp.
(privately held financial
advisor)
|
164
|
Member of Board of
Blue Ocean Acquisition
Corp.; Member of
Board of Trust for
Mutual Understanding
(non-profit promoting
the arts and
environment); Member
of Board of Greenwall
Foundation (bioethics
research foundation)
and its Investment
Committee; Member of
Board of Friends of the
LRC (non-profit legal
advocacy); Board
Member and
Investment Committee
Member of Pulitzer
Center for Crisis
Reporting (non-profit
journalism); and
Trustee of certain
Oppenheimer Funds
|
|
Teresa M. Ressel — 1962
|
Trustee
|
2017
|
Non-executive director
and trustee of a number of
public and private
business corporations
Formerly: Chief Executive
Officer, UBS Securities
LLC (investment banking);
Group Chief Operating
Officer, UBS AG Americas
(investment banking); Sr.
Management Team
Olayan America, The
Olayan Group
(international
investor/commercial/industrial);
and Assistant Secretary
for Management & Budget
and Designated Chief
Financial Officer, U.S.
Department of Treasury
|
164
|
None
|
C-6
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
Overseen by
Trustee
|
Other Trusteeship(s)/
Directorship Held by
Trustee/Director During At
Least The Past 5 Years
|
|
Robert C. Troccoli – 1949
|
Trustee
|
2016
|
Formerly: Adjunct
Professor, University of
Denver – Daniels College
of Business; and
Managing Partner, KPMG
LLP
|
164
|
None
|
|
Daniel S. Vandivort –1954
|
Trustee
|
2019
|
President, Flyway
Advisory Services LLC
(consulting and property
management) and
Member, Investment
Committee of Historic
Charleston Foundation
Formerly: President and
Chief Investment Officer,
previously Head of Fixed
Income, Weiss Peck and
Greer/Robeco Investment
Management; Trustee and
Chair, Weiss Peck and
Greer Funds Board; and
various capacities at CS
First Boston including
Head of Fixed Income at
First Boston Asset
Management
|
164
|
Formerly: Trustee and
Governance Chair,
Oppenheimer Funds;
Treasurer, Chairman of
the Audit and Finance
Committee, Huntington
Disease Foundation of
America.
|
Officers
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
Glenn Brightman – 1972
|
President and
Principal
Executive
Officer
|
2023
|
Chief Operating Officer, Americas, Invesco Ltd.; Senior Vice
President, Invesco Advisers, Inc.; President and Principal
Executive Officer, The Invesco Funds; and Manager, Invesco
Investment Advisers LLC
Formerly: Global Head of Finance, Invesco Ltd; Executive Vice
President and Chief Financial Officer, Nuveen
|
|
Melanie Ringold – 1975
|
Senior Vice
President, Chief
Legal Officer
and Secretary
|
2023
|
Head of Legal of the Americas, Invesco Ltd.; Senior Vice
President and Secretary, Invesco Advisers, Inc. (formerly known
as Invesco Institutional (N.A.), Inc.) (registered investment
adviser); Secretary, Invesco Distributors, Inc. (formerly known as
Invesco AIM Distributors, Inc.); Secretary, Invesco Investment
Services, Inc. (formerly known as Invesco AIM Investment
Services, Inc.); Senior Vice President, Chief Legal Officer and
Secretary, The Invesco Funds; Secretary, Invesco Investment
Advisers LLC and Invesco Capital Markets, Inc.; Chief Legal
Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-
Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust,
Invesco Actively Managed Exchange-Traded Fund Trust, Invesco
Actively Managed Exchange-Traded Commodity Fund Trust and
Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary and
Vice President, Harbourview Asset Management Corporation;
Secretary and Senior Vice President, OppenheimerFunds, Inc.
and Invesco Managed Accounts, LLC; Secretary and Senior Vice
|
C-7
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
President, Oppenheimer Acquisition Corp.; Secretary, SteelPath
Funds Remediation LLC; and Secretary and Senior Vice
President, Trinity Investment Management Corporation
Formerly: Secretary and Senior Vice President, OFI SteelPath,
Inc.; Assistant Secretary, Invesco Distributors, Inc., Invesco
Advisers, Inc., Invesco Investment Services, Inc., Invesco Capital
Markets, Inc., Invesco Capital Management LLC, and Invesco
Investment Advisers LLC; and Assistant Secretary and Assistant
Vice President, Invesco Funds
|
|
John M. Zerr – 1962
|
Senior Vice
President
|
2006
|
Chief Operating Officer of the Americas; Senior Vice President,
Invesco Advisers, Inc. (formerly known as Invesco Institutional
(N.A.), Inc.) (registered investment adviser); Senior Vice
President, Invesco Distributors, Inc. (formerly known as Invesco
AIM Distributors, Inc.); Director and Vice President, Invesco
Investment Services, Inc. (formerly known as Invesco AIM
Investment Services, Inc.); Senior Vice President, The Invesco
Funds; Managing Director, Invesco Capital Management LLC;
Senior Vice President, Invesco Capital Markets, Inc. (formerly
known as Van Kampen Funds Inc.); Manager, Invesco
Specialized Products, LLC; Member, Invesco Canada Funds
Advisory Board; Director, President and Chief Executive Officer,
Invesco Corporate Class Inc. (corporate mutual fund company);
Director, Chairman, President and Chief Executive Officer,
Invesco Canada Ltd. (formerly known as Invesco Trimark
Ltd./Invesco Trimark Ltèe) (registered investment adviser and
registered transfer agent); President, Invesco, Inc.; President,
Invesco Global Direct Real Estate Feeder GP Ltd.; President,
Invesco IP Holdings (Canada) Ltd; President, Invesco Global
Direct Real Estate GP Ltd.; and President, Invesco Financial
Services Ltd/Services Financiers Invesco Ltée
Formerly: Director and Chairman, Invesco Trust Company;
Manager, Invesco Indexing LLC; Director, Invesco Investment
Advisers LLC (formerly known as Van Kampen Asset
Management); President, Trimark Investments Ltd/Services
Financiers Invesco Ltee; Director and Senior Vice President,
Invesco Insurance Agency, Inc.; Director and Senior Vice
President, Invesco Management Group, Inc. (formerly known as
Invesco AIM Management Group, Inc.); Secretary and General
Counsel, Invesco Management Group, Inc. (formerly known as
Invesco AIM Management Group, Inc.); Secretary, Invesco
Investment Services, Inc. (formerly known as Invesco AIM
Investment Services, Inc.); Chief Legal Officer and Secretary, The
Invesco Funds; Secretary and General Counsel, Invesco
Investment Advisers LLC (formerly known as Van Kampen Asset
Management); Secretary and General Counsel, Invesco Capital
Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief
Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco
Exchange-Traded Fund Trust II, Invesco India Exchange-Traded
Fund Trust, Invesco Actively Managed Exchange-Traded Fund
Trust, Invesco Actively Managed Exchange-Traded Commodity
Fund Trust and Invesco Exchange-Traded Self-Indexed Fund
Trust; Secretary, Invesco Indexing LLC; Director, Secretary,
General Counsel and Senior Vice President, Van Kampen
Exchange Corp.; Director, Vice President and Secretary, IVZ
Distributors, Inc. (formerly known as INVESCO Distributors, Inc.);
Director and Vice President, INVESCO Funds Group, Inc.;
Director and Vice President, Van Kampen Advisors Inc.; Director,
Vice President, Secretary and General Counsel, Van Kampen
|
C-8
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
Investor Services Inc.; Director and Secretary, Invesco
Distributors, Inc. (formerly known as Invesco AIM Distributors,
Inc.); Director, Senior Vice President, General Counsel and
Secretary, Invesco AIM Advisers, Inc. and Van Kampen
Investments Inc.; Director, Vice President and Secretary, Fund
Management Company; Director, Senior Vice President,
Secretary, General Counsel and Vice President, Invesco AIM
Capital Management, Inc.; and Chief Operating Officer and
General Counsel, Liberty Ridge Capital, Inc. (an investment
adviser)
|
|
Tony Wong – 1973
|
Senior Vice
President
|
2023
|
Senior Managing Director, Invesco Ltd.; Director, Chairman, Chief
Executive Officer and President, Invesco Advisers, Inc.; Director
and Chairman, Invesco Private Capital, Inc., INVESCO Private
Capital Investments, Inc. and INVESCO Realty, Inc.; Director,
Invesco Senior Secured Management, Inc.; President, Invesco
Managed Accounts, LLC and SNW Asset Management
Corporation; and Senior Vice President, The Invesco Funds
Formerly: Assistant Vice President, The Invesco Funds; and Vice
President, Invesco Advisers, Inc.
|
|
Stephanie C. Butcher -
1971
|
Senior Vice
President
|
2023
|
Senior Managing Director, Invesco Ltd.; Senior Vice President,
The Invesco Funds; Director and Chief Executive Officer, Invesco
Asset Management Limited
|
|
Adrien Deberghes – 1967
|
Principal
Financial Officer,
Treasurer and
Senior Vice
President
|
2020
|
Head of the Fund Office of the CFO and Fund Administration;
Vice President, Invesco Advisers, Inc.; Director, Invesco Trust
Company; Principal Financial Officer, Treasurer and Senior Vice
President, The Invesco Funds; and Vice President, Invesco
Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund
Trust II, Invesco India Exchange-Traded Fund Trust, Invesco
Actively Managed Exchange-Traded Fund Trust, Invesco Actively
Managed Exchange-Traded Commodity Fund Trust and Invesco
Exchange-Traded Self-Indexed Fund Trust
Formerly: Vice President, The Invesco Funds; Senior Vice
President and Treasurer, Fidelity Investments
|
|
Crissie M. Wisdom – 1969
|
Anti-Money
Laundering
Compliance
Officer
|
2013
|
Anti-Money Laundering and OFAC Compliance Officer for Invesco
U.S. entities including: Invesco Advisers, Inc. and its affiliates,
Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco
Investment Services, Inc., The Invesco Funds, Invesco Capital
Management, LLC, Invesco Trust Company; and Fraud
Prevention Manager for Invesco Investment Services, Inc.
|
|
Todd F. Kuehl – 1969
|
Chief
Compliance
Officer and
Senior Vice
President
|
2020
|
Chief Compliance Officer, Invesco Advisers, Inc. (registered
investment adviser); and Chief Compliance Officer and Senior
Vice President, The Invesco Funds
Formerly: Managing Director and Chief Compliance Officer, Legg
Mason (Mutual Funds); Chief Compliance Officer, Legg Mason
Private Portfolio Group (registered investment adviser)
|
|
James Bordewick, Jr. –
1959
|
Senior Vice
President and
Senior Officer
|
2022
|
Senior Vice President and Senior Officer, The Invesco Funds
Formerly, Chief Legal Officer, KingsCrowd, Inc. (research and
analytical platform for investment in private capital markets); Chief
Operating Officer and Head of Legal and Regulatory, Netcapital
(private capital investment platform); Managing Director, General
Counsel of asset management and Chief Compliance Officer for
asset management and private banking, Bank of America
|
C-9
|
Name, Year of Birth
|
Position(s) Held
with the Trust
|
Trustee and/or
Officer Since
|
Principal Occupation(s) During At Least The Past 5 Years
|
|
|
|
|
Corporation; Chief Legal Officer, Columbia Funds and BofA
Funds; Senior Vice President and Associate General Counsel,
MFS Investment Management; Chief Legal Officer, MFS Funds;
Associate, Ropes & Gray; Associate, Gaston Snow & Ely Bartlett.
|
Trustee Ownership of Fund Shares as of December 31, 2023
|
Name of Trustee
|
Dollar Range of Equity Securities Per Fund
|
Aggregate Dollar Range of
Equity Securities in All
Registered Investment
Companies Overseen by
Trustee in Invesco Funds
|
|
Interested Person
|
|
|
|
Jeffrey H. Kupor2
|
None
|
Over $100,000
|
|
Douglas Sharp2
|
None
|
None
|
|
Independent Trustees
|
|
|
|
Beth Ann Brown
|
None
|
Over $100,0003
|
|
Carol Deckbar2
|
N/A
|
N/A
|
|
Cynthia Hostetler
|
None
|
Over $100,0003
|
|
Eli Jones
|
None
|
Over $100,0003
|
|
Elizabeth Krentzman
|
None
|
Over $100,0003
|
|
Anthony J. LaCava, Jr.
|
None
|
Over $100,0003
|
|
James “Jim” Liddy2
|
N/A
|
N/A
|
|
Prema Mathai-Davis
|
None
|
Over $100,0003
|
|
Joel W. Motley
|
None
|
Over $100,0003
|
|
Teresa M. Ressel
|
None
|
Over $100,0003
|
|
Robert C. Troccoli
|
None
|
Over $100,0003
|
|
Daniel S. Vandivort
|
None
|
Over $100,0003
|
2.
The information in the table is provided as of December 31, 2023. Messrs. Kupor, Sharp
and Liddy and Ms. Deckbar were elected as trustees of the Trust effective January 16, 2024.
3.
Includes total amount of compensation deferred by the trustee at his or her election
pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested
in one or more of the Invesco Funds.
C-10
APPENDIX D - TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee
of the Trust who was not affiliated with Invesco during the year ended December 31, 2023, unless otherwise noted.
|
Trustee
|
Aggregate
Compensation
From the Trust(1)
|
Retirement
Benefits Accrued
by All Invesco
Funds
|
Estimated
Annual Benefits
Upon Retirement(2)
|
Total
Compensation
From All Invesco Funds Paid to
the Trustees(3)
|
|
Independent Trustees(4,5)
|
|
|
|
|
|
Beth Ann Brown
|
$32,748
|
-
|
-
|
$630,000
|
|
Cynthia Hostetler
|
23,877
|
-
|
-
|
465,000
|
|
Eli Jones
|
24,260
|
-
|
-
|
422,500
|
|
Elizabeth Krentzman
|
21,692
|
-
|
-
|
470,000
|
|
Anthony J. LaCava, Jr.
|
24,392
|
-
|
-
|
477,500
|
|
Prema Mathai-Davis
|
22,723
|
-
|
$205,000
|
442,500
|
|
Joel W. Motley
|
22,339
|
-
|
-
|
430,000
|
|
Teresa M. Ressel
|
22,587
|
-
|
-
|
440,000
|
|
Robert C. Troccoli
|
22,719
|
-
|
-
|
445,000
|
|
Daniel S. Vandivort
|
23,751
|
-
|
-
|
462,500
|
|
Carol W. Deckbar
|
4,091
|
-
|
-
|
-
|
|
James Liddy
|
4,091
|
-
|
-
|
-
|
|
|
|
|
|
|
(1)
Amounts shown are based on the fiscal year ended February 29, 2024. The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended February 29, 2024, including earnings, was $51,738, representing deferrals from Ms. Hostetler, Messers. LaCava, Motely, Troccoli and Vandivort and Drs. Jones and Mathai-Davis.
On November 10, 2021, Russell Burk resigned from his role as Senior Vice President and Senior Officer of the Invesco Funds. During the fiscal year ended February 29, 2024, aggregate compensation from the Trust for Mr. Burk was $69,204.
On November 10, 2021, Russell Burk resigned from his role as Senior Vice President and Senior Officer of the Invesco Funds. During the fiscal year ended February 29, 2024, aggregate compensation from the Trust for Mr. Burk was $69,204.
(2)
These amounts represent the estimated annual benefits payable by the Invesco Funds upon the trustees’ retirement and assumes each trustee serves until his or her normal retirement date. These amounts
are not adjusted to reflect deemed investment appreciation or depreciation.
(3)
These amounts represent the compensation paid from all Invesco Funds to the individuals
who serve as trustees. All trustees currently serve as trustee of 32 registered investment companies advised by Invesco.
(4)
On August 28, 2022, Mr. Christopher L. Wilson retired . During the fiscal year ended February 29, 2024, compensation from the Trust for Mr. Wilson for consultant services provided to the Trust subsequent to his retirement was $29,034. Pursuant to a consulting agreement with the Trust, Mr. Wilson may receive payments for consulting
services provided to the Trust for up to three years following his retirement.
(5)
Effective January 16, 2024, Ms. Carol Deckbar and Mr. James Liddy have been onboarded as two new Trustees.
D-1
APPENDIX E - PROXY POLICY AND PROCEDURES
The Adviser and each sub-adviser rely on this policy. In addition, Invesco Asset Management
(Japan) Limited and Invesco Asset Management (India) Pvt. Ltd. have also adopted operating
guidelines and procedures for proxy voting particular to each regional investment
center. Such guidelines and procedures are attached hereto.
Invesco’s Policy Statement on Global
Corporate Governance
and Proxy Voting
Corporate Governance
and Proxy Voting
Effective January 2024
E-1
Table of Contents
|
|
|
|
|
I.
|
Introduction
|
E -4
|
|
|
A. Our Approach to Proxy Voting
|
E -4
|
|
|
B. Applicability of Policy
|
E -4
|
|
|
|
|
|
II.
|
Global Proxy Voting Operational Procedures
|
E -5
|
|
|
A. Oversight and Governance
|
E -5
|
|
|
B. The Proxy Voting Process
|
E -5
|
|
|
C. Retention and Oversight of Proxy Service Providers
|
E -6
|
|
|
D. Disclosures and Recordkeeping
|
E -6
|
|
|
E. Market and Operational Limitations
|
E -7
|
|
|
F. Securities Lending
|
E -8
|
|
|
G. Conflicts of Interest
|
E -8
|
|
|
H. Review of Policy
|
E -9
|
|
|
|
|
|
III.
|
Our Good Governance Principles
|
E -10
|
|
|
A. Transparency
|
E -10
|
|
|
B. Accountability
|
E -11
|
|
|
C. Board Composition and Effectiveness
|
E -13
|
|
|
D. Long-Term Stewardship of Capital
|
E -14
|
|
|
E. Environmental, Social and Governance Risk Oversight
|
E -15
|
|
|
F. Executive Compensation and Alignment
|
E -16
|
|
|
|
|
|
|
Exhibit A
|
E -17
|
I.
Introduction
Invesco Ltd. and its wholly owned investment adviser subsidiaries (collectively, “Invesco”, the “Company”, “our” or “we”) have adopted and implemented this Policy Statement on Global Corporate Governance and
Proxy Voting (“Global Proxy Voting Policy” or “Policy”), which we believe describe policies and procedures reasonably designed to ensure proxy voting matters are conducted in the best interests of our clients.
A.
Our Approach to Proxy Voting
Invesco understands proxy voting is an integral aspect of the investment management services it provides to clients. As an investment adviser, Invesco has a fiduciary duty to act in the best interests of our clients. Where Invesco has been delegated the authority to vote proxies with respect to securities held in client portfolios, we exercise such authority in the manner we believe best serves the interests of our clients and their investment objectives. We recognize that proxy voting is an important tool that enables us to drive shareholder value.
A summary of our global operational procedures and governance structure is included
in Part II of this Policy. Invesco’s good governance principles, which are included in Part III of this Policy, and our internal proxy voting guidelines are both principles and rules-based and cover topics
that typically appear on voting ballots. Invesco’s portfolio management teams retain ultimate authority to vote proxies. Given the complexity of proxy issues across our clients’ holdings globally, our investment teams consider many factors when determining how to cast votes. We seek to evaluate and make voting decisions that favor proxy proposals and governance practices that, in our view, promote
long-term shareholder value.
E-2
B.
Applicability of Policy
Invesco’s portfolio management teams vote proxies on behalf of Invesco-sponsored funds and both fund and non-fund advisory clients that have explicitly granted Invesco authority in writing
to vote proxies on their behalf. In the case of institutional or sub-advised clients, Invesco will vote
the proxies in accordance with this Policy unless the client agreement specifies that the client
retains the right to vote or has designated a named fiduciary to direct voting.
This Policy is implemented by all entities listed in Exhibit A, except as noted below. Due to regional or asset class-specific considerations, certain entities may have local proxy voting guidelines or
policies and procedures that differ from this Policy. In the event local policies and this Policy differ, the local policy will apply. These entities subject to local policies are listed in Exhibit A and include: Invesco Asset Management (Japan) Limited, Invesco Asset Management (India) Pvt. Ltd, Invesco Taiwan
Ltd, Invesco Real Estate Management S.a.r.l and Invesco Capital Markets, Inc. for Invesco Unit Investment Trusts.
Where our passively managed strategies and certain other client accounts managed in accordance
with fixed income, money market and index strategies (including exchange-traded funds) (referred to as “passively managed accounts”) hold the same investments as our actively managed equity funds, voting decisions with respect to those accounts generally follow the voting decisions made
by the largest active holder of the equity shares. Invesco refers to this approach as “Majority Voting.” This process of Majority Voting seeks to ensure that our passively managed accounts benefit from the engagement
and deep dialogue of our active investment teams, which Invesco believes benefits shareholders in passively managed accounts. Invesco will generally apply the majority holder’s vote instruction to these passively managed accounts. Where securities are held only in passively managed accounts and not owned in our actively managed accounts, the proxy will be generally voted in line with this Policy and internal proxy voting guidelines. Notwithstanding the above, portfolio management teams of our passively managed accounts retain full discretion over proxy voting decisions and may determine
it appropriate to individually evaluate a specific proxy proposal or override Majority Voting and vote
the shares as they determine to be in the best interest of those accounts, absent certain types of conflicts of interest, which are discussed elsewhere in the Policy. To the extent our portfolio management teams believe a specific proxy proposal requires enhanced analysis or if it is not covered by the Policy or
internal guidelines, our portfolio management teams will evaluate such proposal and execute the voting decision.
II.
Global Proxy Voting Operational Procedures
Invesco’s global proxy voting operational procedures (the “Procedures”) are in place to implement the provisions of this Policy. Invesco aims to vote all proxies where we have been granted voting authority in accordance with this Policy, as implemented by the Procedures outlined in this Section II. It is the responsibility of Invesco’s Proxy Voting and Governance team to maintain and facilitate the review of the Procedures annually.
A.
Oversight and Governance
Oversight of the proxy voting process is provided by the Proxy Voting and Governance
team and the Global Invesco Proxy Advisory Committee (“Global IPAC”). For some clients, third parties (e.g., U.S. fund boards) and internal sub-committees also provide oversight of the proxy voting
process.
Guided by its philosophy that investment teams should manage proxy voting, Invesco
has created the Global IPAC. The Global IPAC is an investments-driven committee comprised of representatives
from various investment management teams globally and Invesco’s Global Head of ESG and is chaired by its Director of Proxy Voting and Governance. Representatives from Invesco’s Legal and Compliance, Risk and Government Affairs departments may also participate in Global IPAC meetings. The
Global IPAC provides a forum for investment teams, in accordance with this Policy, to:
●
monitor, understand and discuss key proxy issues and voting trends within the Invesco
complex;
●
assist Invesco in meeting regulatory obligations;
E-3
●
review votes not aligned with our good governance principles; and
●
consider conflicts of interest in the proxy voting process.
In fulfilling its responsibilities, the Global IPAC meets as necessary, but no less
than semi-annually, and has the following responsibilities and functions: (i) acts as a key liaison between the Proxy Voting and Governance team and portfolio management teams to ensure compliance with this Policy; (ii) provides insight on market trends as it relates to stewardship practices; (iii) monitors proxy votes that present potential conflicts of interest; and (iv) reviews and provides input, at least annually,
on this Policy and related internal procedures and recommends any changes to the Policy based on, but
not limited to, Invesco’s experience, evolving industry practices, or developments in applicable laws or regulations. In addition, when necessary, the Global IPAC Conflict of Interest Sub-committee makes voting decisions
on proxies that require an override of the Policy due to an actual or perceived conflict
of interest; the Global IPAC reviews any such voting decisions.
B.
The Proxy Voting Process
At Invesco, investment teams execute voting decisions through our proprietary voting platform
and are supported by the Proxy Voting and Governance team and a dedicated technology team. Invesco’s proprietary voting platform streamlines the proxy voting process by providing our global investment teams with direct access to proxy meeting materials including ballots, Invesco’s internal proxy voting guidelines and recommendations, as well as proxy research and vote recommendations issued by Proxy Service Providers (as such term is defined below). Votes executed on Invesco’s proprietary voting platform are transmitted to our proxy voting agent electronically and are then delivered to the respective designee for tabulation.
Invesco’s Proxy Voting and Governance team monitors whether we have received proxy ballots
for shareholder meetings in which we are entitled to vote. This involves coordination among various parties in the proxy voting ecosystem, such as our proxy voting agent, custodians and ballot distributors. If necessary, we may choose to escalate a matter to facilitate our ability to exercise
our right to vote.
Our proprietary systems facilitate internal control and oversight of the voting process.
To facilitate the casting of votes in an efficient manner, Invesco may choose to pre-populate and leverage the capabilities of these proprietary systems to automatically submit votes based on its internal proxy voting guidelines and in circumstances where Majority Voting, share blocking (as defined below) or proportional voting applies. If necessary, votes may be cast by Invesco or via the Proxy Service Providers Web
platform at our direction.
C.
Retention and Oversight of Proxy Service Providers
Invesco has retained two independent third party proxy voting service providers to provide
proxy support globally: Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis (“GL”). In addition to ISS and GL, Invesco may retain certain local proxy service providers to access regionally specific research (collectively with ISS and GL, “Proxy Service Providers”). The services may include one or more of the following: providing a comprehensive analysis of each voting item and interpretations of each based on Invesco’s internally developed proxy voting guidelines; and providing assistance with the administration of the proxy process and certain proxy voting-related functions, including, but not limited to, operational, reporting and recordkeeping services.
While Invesco may take into consideration the information and recommendations provided
by the Proxy Service Providers, including based upon Invesco’s internal proxy voting guidelines and recommendations provided to such Proxy Service Providers, Invesco’s portfolio management teams retain full and independent discretion with respect to proxy voting decisions.
Updates to previously issued proxy research reports and recommendations may be provided to incorporate newly available information or additional disclosure provided by the issuer regarding a
matter to be voted on, or to correct factual errors that may result in the issuance of revised proxy vote
E-4
recommendations. Invesco’s Proxy Voting and Governance team periodically monitors for these research alerts issued by Proxy Service Providers that are shared with our portfolio management teams.
Invesco performs extensive initial and ongoing due diligence on the Proxy Service
Providers it engages globally. Invesco conducts annual due diligence meetings as part of its ongoing oversight
of Proxy Service Providers. The topics included in these annual due diligence reviews include
material changes in service levels, leadership and control, conflicts of interest, methodologies for
formulating vote recommendations, operations, and research personnel, among other things. In addition,
Invesco monitors and communicates with these firms throughout the year and monitors their
compliance with Invesco’s performance and policy standards.
As part of our annual policy development process, Invesco may engage with other external
proxy and governance experts to understand market trends and developments. These meetings provide
Invesco with an opportunity to assess the Proxy Service Providers’ capabilities, conflicts of interest and service levels, as well as provide investment professionals with direct insight into the Proxy Service Providers’ stances on key corporate governance and proxy topics and their policy framework/methodologies.
Invesco completes a review of the System and Organizational Controls (“SOC”) Reports for Proxy Service Providers to confirm the related controls operated effectively to provide
reasonable assurance.
D.
Disclosures and Recordkeeping
Unless otherwise required by local or regional requirements, Invesco maintains voting
records for at least seven (7) years. Invesco makes its proxy voting records publicly available in compliance with regulatory requirements and industry best practices in the regions below:
●
In accordance with the U.S. Securities and Exchange Commission regulations, Invesco will file a record of all proxy voting activity for the prior 12 months ending June 30th for each
U.S. registered fund. In addition, Invesco, as an institutional manager that is required to file Form 13F, will file a record of its votes on certain executive compensation (“say on pay”) matters. These fund proxy voting filings and institutional manager say on pay voting filings will
generally be made on or before August 31st of each year. Each year, the proxy voting records for each U.S. registered fund are made available on Invesco’s website here. Moreover, and to the extent applicable, the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including Department of Labor regulations and guidance thereunder, provide that the
named fiduciary generally should be able to review not only the investment adviser’s voting procedure with respect to plan-owned stock, but also to review the actions taken in individual
proxy voting situations. In the case of institutional and sub-advised clients, clients may contact their client service representative to request information about how Invesco voted proxies on their
behalf. Absent specific contractual guidelines, such requests may be made on a semi-annual
basis.
●
In the UK and Europe, Invesco publicly discloses our proxy votes monthly in compliance
with the UK Stewardship Code and for the European Shareholder Rights Directive annually here.
●
In Canada, Invesco publicly discloses our annual proxy votes each year here by August 31st, covering the 12-month period ending June 30th in compliance with the National Instrument
81-106 Investment Fund Continuous Disclosure.
●
In Japan, Invesco publicly discloses our proxy votes annually in compliance with the
Japan Stewardship Code here.
●
In India, Invesco publicly discloses our proxy votes quarterly here in compliance with The Securities and Exchange Board of India (“SEBI”) Circular on stewardship code for all Mutual Funds and all categories of Alternative Investment Funds in relation to their investment
in listed equities. SEBI has implemented principles on voting for Mutual Funds through circulars
dated March 15, 2010, March 24, 2014 and March 5, 2021, which prescribed detailed mandatory requirements for Mutual Funds in India to disclose their voting policies and actual
voting by Mutual Funds on different resolutions of investee companies.
E-5
●
In Hong Kong, Invesco Hong Kong Limited will provide proxy voting records upon request
in compliance with the Securities and Futures Commission (“SFC”) Principles of Responsible Ownership.
●
In Taiwan, Invesco publicly discloses our proxy voting policy and proxy votes annually
in compliance with Taiwan’s Stewardship Principles for Institutional Investors here.
●
In Australia, Invesco publicly discloses a summary of its proxy voting record annually
here.
●
In Singapore, Invesco Asset Management Singapore Ltd. will provide proxy voting records
upon request in compliance with the Singapore Stewardship Principles for Responsible Investors.
Invesco may engage Proxy Service Providers to make available or maintain certain required proxy voting records in accordance with the above stated applicable regulations. Separately managed account clients that have authorized Invesco to vote proxies on their behalf will receive
proxy voting information with respect to those accounts upon request. Certain other clients may obtain information about how we voted proxies on their behalf by contacting their client service representative or advisor. Invesco does not publicly pre-disclose voting intentions in advance of shareholder meetings.
E.
Market and Operational Limitations
In the great majority of instances, Invesco will vote proxies. However, in certain
circumstances, Invesco may refrain from voting where the economic or other opportunity costs of voting exceed any benefit to clients. Moreover, ERISA fiduciaries, in voting proxies or exercising other shareholder
rights, must not subordinate the economic interests of plan participants and beneficiaries to unrelated
objectives. These matters are left to the discretion of the relevant portfolio manager. Such circumstances
could include, for example:
●
Certain countries impose temporary trading restrictions, a practice known as “share blocking.” This means that once the shares have been voted, the shareholder does not have the ability to sell the shares for a certain period of time, usually until the day after the conclusion
of the shareholder meeting. Invesco generally refrains from voting proxies at companies where share blocking applies. In some instances, Invesco may determine that the benefit to the client(s) of voting a specific proxy outweighs the client’s temporary inability to sell the shares.
●
Some companies require a representative to attend meetings in person to vote a proxy,
or submit additional documentation or the disclosure of beneficial owner details to vote. Invesco
may determine that the costs of sending a representative or submitting additional documentation or disclosures outweigh the benefit of voting a particular proxy.
●
Invesco may not receive proxy materials from the relevant fund or client custodian
with sufficient time and information to make an informed independent voting decision.
●
Invesco held shares on the record date but has sold them prior to the meeting date.
In some non-U.S. jurisdictions, although Invesco uses reasonable efforts to vote a
proxy, proxies may not be accepted or may be rejected due to changes in the agenda for a shareholder
meeting for which Invesco does not have sufficient notice, due to a proxy voting service not being offered
by the custodian in the local market or due to operational issues experienced by third parties involved
in the process or by the issuer or sub-custodian. In addition, despite the best efforts of Invesco and
its proxy voting agent, there may be instances where our votes may not be received or properly tabulated by
an issuer or the issuer’s agent. Invesco will generally endeavor to vote and maintain any paper ballots received provided
they are delivered in a timely manner ahead of the vote deadline.
F.
Securities Lending
Invesco’s funds may participate in a securities lending program. In circumstances where funds’ shares are on loan, the voting rights of those shares are transferred to the borrower. If
the security in question is on loan as part of a securities lending program, Invesco may determine that the
vote is material to the
E-6
investment and therefore, the benefit to the client of voting a particular proxy outweighs the economic benefits of securities lending. In those instances, Invesco may determine to recall
securities that are on loan prior to the meeting record date, so that we will be entitled to vote those shares.
For example, for certain actively managed funds, the lending agent has standing instructions to systematically
recall all securities on loan for Invesco to vote the proxies on those previously loaned shares. There may be instances where Invesco may be unable to recall shares or may choose not to recall
shares. Such circumstances may include instances when Invesco does not receive timely notice of
the meeting, or when Invesco deems the opportunity for a fund to generate securities lending revenue
to outweigh the benefits of voting at a specific meeting. The relevant portfolio manager will make these determinations.
G.
Conflicts of Interest
There may be occasions where voting proxies may present a perceived or actual conflict
of interest between Invesco, as investment adviser, and one or more of Invesco’s clients or vendors.
Firm-Level Conflicts of Interest
A conflict of interest may exist if Invesco has a material business relationship with
either the company soliciting a proxy or a third party that has a material interest in the outcome of
a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Such relationships may
include, among others, a client relationship, serving as a vendor whose products / services are material
or significant to Invesco, serving as a distributor of Invesco’s products, or serving as a significant research provider or broker to Invesco.
Invesco identifies potential conflicts of interest based on a variety of factors,
including but not limited to the materiality of the relationship between the issuer or its affiliates to Invesco.
Material firm-level conflicts of interests are identified by individuals and groups
within Invesco globally based on criteria established by the Proxy Voting and Governance team. These criteria are monitored and updated periodically by the Proxy Voting and Governance team so up-to-date information is available when conducting conflicts checks. Operating procedures and associated governance
are designed to seek to ensure conflicts of interest are appropriately considered ahead
of voting proxies. The Global IPAC Conflict of Interest Sub-committee maintains oversight of the process.
Companies identified as conflicted will be voted in line with the principles below as implemented by Invesco’s internal proxy voting guidelines. To the extent a portfolio manager disagrees with the Policy, our
processes and procedures seek to ensure that justifications and rationales are fully documented and presented to the Global IPAC Conflict of Interest Sub-committee for approval by a
majority vote.
As an additional safeguard, persons from Invesco’s marketing, distribution and other customer-facing functions may not serve on the Global IPAC. For the avoidance of doubt, Invesco may
not consider Invesco Ltd.’s pecuniary interest when voting proxies on behalf of clients. To avoid any appearance of a conflict of interest, Invesco will not vote proxies issued by Invesco Ltd. that are held in client accounts.
Personal Conflicts of Interest
A conflict also may exist where an Invesco employee has a known personal or business
relationship with other proponents of proxy proposals, participants in proxy contests, corporate
directors, or candidates for directorships. Under Invesco’s Global Code of Conduct, Invesco entities and individuals must act in the best interests of clients and must avoid any situation that gives
rise to an actual or perceived conflict of interest.
All Invesco personnel with proxy voting responsibilities are required to report any
known personal or business conflicts of interest regarding proxy issues with which they are involved.
In such instances, the individual(s) with the conflict will be excluded from the decision-making process
relating to such issues.
Voting Funds of Funds
E-7
There may be conflicts that arise from Invesco voting on matters when shares of Invesco-sponsored
funds are held by other Invesco funds or entities. The scenarios below set out examples of how Invesco votes in these instances:
●
When required by law or regulation, shares of an Invesco fund held by other Invesco
funds will be voted in the same proportion as the votes of external shareholders of the underlying
fund. If such proportional voting is not operationally possible, Invesco will not vote the
shares.
●
When required by law or regulation, shares of an unaffiliated registered fund held
by one or more Invesco funds will be voted in the same proportion as the votes of external shareholders
of the underlying fund. If such proportional voting is not operationally possible, Invesco
will not vote the shares.
●
For U.S. funds of funds where proportional voting is not required by law or regulation, shares of
Invesco funds will be voted in the same proportion as the votes of external shareholders
of the underlying fund. If such proportional voting is not operationally possible, Invesco
will vote in line with our internally developed voting guidelines.
●
Non-U.S. funds of funds will not be voted proportionally. The applicable Invesco entity will vote in line with its local policies, as indicated in Exhibit A. If no local policies exist, Invesco will vote non-U.S. funds of funds in line with the firm level conflicts of interest process described
above.
●
Where client accounts are invested directly in shares issued by Invesco affiliates
and Invesco has proxy voting authority, shares will be voted proportionally in line with non-affiliated holders. If proportional voting is not possible, the shares will be voted in line with a Proxy Service Provider’s recommendation.
H.
Review of Policy
It is the responsibility of the Global IPAC to review this Policy and the internal proxy voting guidelines annually to consider whether any changes are warranted. This annual review seeks to ensure this Policy and the internal proxy voting guidelines remain consistent with clients’ best interests, regulatory requirements, local market standards and best practices. Further, this Policy and our internal proxy voting guidelines are reviewed at least annually by various departments within Invesco to seek to ensure that they remain consistent with Invesco’s views on best practice in corporate governance and long-term investment stewardship.
III.
Our Good Governance Principles
Invesco’s good governance principles outline our views on best practice in corporate governance and long-term investment stewardship. These principles have been developed by our global investment
teams in collaboration with the Proxy Voting and Governance team and various departments internally. The broad philosophy and guiding principles in this section inform our approach to long-term
investment stewardship and proxy voting. The principles and positions reflected in this Policy are designed to guide Invesco’s investment professionals in voting proxies; they are not intended to be exhaustive
or prescriptive.
Our portfolio management teams retain full discretion on vote execution in the context of our good governance principles and internal proxy voting guidelines, except where otherwise specified in this Policy. The final voting decisions may consider the unique circumstances affecting companies,
regional best practices and any dialogue we have had with company management. As a result, different
portfolio management teams may vote differently on particular proxy votes for the same company. To the extent portfolio management teams choose to vote a proxy in a way that is not aligned with the principles below, such manager’s rationales are fully documented.
When evaluating proxy issues and determining how to cast our votes, Invesco’s portfolio management teams may engage with companies in advance of shareholder meetings, and throughout
the year. These meetings can be joint efforts between our global investment professionals.
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The following guiding principles apply to proxy voting with respect to operating companies. We apply a separate approach to open-end and closed-end investment companies and unit investment
trusts. Where appropriate, these guidelines may be supplemented by additional internal guidance that considers regional variations in best practices, company disclosure and region-specific voting items. Invesco may vote on proposals not specifically addressed by these principles based on an evaluation of a proposal’s likelihood to enhance long-term shareholder value.
Our good governance principles are divided into six key themes that Invesco endorses:
A.
Transparency
We expect companies to provide accurate, timely and complete information that enables
investors to make informed investment decisions and effectively carry out their stewardship activities.
Invesco supports the highest standards in corporate transparency and believes that these disclosures
should be made available ahead of the voting deadlines for the Annual General Meeting or Extraordinary
General Meeting to allow for timely review and decision-making.
Financial reporting: Company accounts and reporting must accurately reflect the underlying economic position of a company. Arrangements that may constitute an actual or perceived conflict
with this objective should be avoided.
●
We will generally support proposals to accept the annual financial statements, statutory
accounts and similar proposals unless these reports are not presented in a timely manner or
significant issues are identified regarding the integrity of these disclosures.
●
We will generally vote against the incumbent audit committee chair, or nearest equivalent,
where the non-audit fees paid to the independent auditor exceed audit fees for two consecutive
years or other problematic accounting practices are identified such as fraud, misapplication
of audit standards or persistent material weaknesses/deficiencies in internal controls over
financial reporting.
●
We will generally not support the ratification of the independent auditor and/or ratification
of their fees payable if non-audit fees exceed audit and audit related fees or if there are significant auditing controversies or questions regarding the independence of the external auditor.
We will consider an auditor’s length of service as a company’s independent auditor in applying this policy.
B.
Accountability
Robust shareholder rights and strong board oversight help ensure that management adhere
to the highest standards of ethical conduct, are held to account for poor performance and
responsibly deliver value creation for stakeholders over the long-term. We therefore encourage companies
to adopt governance features that ensure board and management accountability. In particular,
we consider the following as key mechanisms for enhancing accountability to investors:
One share one vote: Voting rights are an important tool for investors to hold boards and management teams accountable. Unequal voting rights may limit the ability of investors to exercise
their stewardship obligations.
●
We generally do not support proposals that establish or perpetuate dual classes of
voting shares, double voting rights or other means of differentiated voting or disproportionate
board nomination rights.
●
We generally support proposals to decommission differentiated voting rights.
●
Where unequal voting rights are established, we expect these to be accompanied by
reasonable safeguards to protect minority shareholders’ interests.
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Anti-takeover devices: Mechanisms designed to prevent or unduly delay takeover attempts may unduly limit the accountability of boards and management teams to shareholders.
●
We generally will not support proposals to adopt antitakeover devices such as poison
pills. Exceptions may be warranted at entities without significant operations and to preserve
the value of net operating losses carried forward or where the applicability of the pill is
limited in scope and duration.
●
In addition, we will generally not support capital authorizations or amendments to
corporate articles or bylaws at operating companies that may be utilized for antitakeover purposes,
for example, the authorization of classes of shares of preferred stock with unspecified
voting, dividend, conversion or other rights (“blank check” authorizations).
Shareholder rights: We support the rights of shareholders to hold boards and management teams accountable for company performance. We generally support best practice aligned proposals
to enhance shareholder rights, including but not limited to the following:
●
Adoption of proxy access rights
●
Rights to call special meetings
●
Rights to act by written consent
●
Reduce supermajority vote requirements
●
Remove antitakeover provisions
●
Requirement that directors are elected by a majority vote
In addition, we oppose practices that limit shareholders’ ability to express their views at a general meeting such as bundling unrelated proposals or several significant article or bylaw
amendments into a single voting item. We will generally vote against these proposals unless we are satisfied
that all the underlying components are aligned with our views on best practice. We may make exceptions to this policy for non-operating companies (e.g., open-end and closed-end investment companies).
Director Indemnification: Invesco recognizes that individuals may be reluctant to serve as corporate directors if they are personally liable for all related lawsuits and legal costs.
As a result, reasonable limitations on directors’ liability can benefit a company and its shareholders by helping to attract and retain qualified directors while preserving recourse for shareholders in the event
of misconduct by directors. Accordingly, unless there is insufficient information to make a decision
about the nature of the proposal, Invesco will generally support proposals to limit directors’ liability and provide indemnification and/or exculpation, provided that the arrangements are reasonably limited in scope
to directors acting in good faith and, in relation to criminal matters, limited in scope to directors having
reasonable grounds for believing the conduct was lawful.
Responsiveness: Boards should respond to investor concerns in a timely fashion, including reasonable
requests to engage with company representatives regarding such concerns, and address
matters that receive significant voting dissent at general meetings of shareholders.
●
We will generally vote against the incumbent chair of the governance committee, or nearest equivalent, in cases where the board has not adequately responded to items receiving
significant voting opposition from shareholders at an annual or extraordinary general meeting.
●
We will generally vote against the incumbent chair of the governance committee, or nearest equivalent, where the board has not adequately responded to a shareholder proposal
which has received significant support from shareholders.
●
We will generally vote against the incumbent chair of the compensation committee, or nearest equivalent, if there are significant ongoing concerns with a company’s compensation practices
E-10
that have not been addressed by the committee or egregious concerns with the company’s compensation practices for two years consecutively.
●
We will generally vote against the incumbent compensation committee chair, or nearest equivalent, where there are ongoing concerns with a company’s compensation practices and there is no opportunity to express dissatisfaction by voting against an advisory vote
on executive compensation, remuneration report (or policy) or nearest equivalent.
●
Where a company has not adequately responded to engagement requests from Invesco or
satisfactorily addressed issues of concern, we may oppose director nominations, including,
but not limited to, nominations for the lead independent director and/or committee chairs.
Virtual shareholder meetings: Companies should hold their annual or special shareholder meetings in a manner that best serves the needs of its shareholders and the company. Shareholders
should have an opportunity to participate in such meetings. Shareholder meetings provide an important
mechanism by which shareholders provide feedback or raise concerns without undue censorship
and hear from the board and management.
●
We will generally support management proposals seeking to allow for the convening
of hybrid shareholder meetings (allowing shareholders the option to attend and participate either
in person or through a virtual platform).
●
Management or shareholder proposals that seek to authorize the company to hold virtual-only
meetings (held entirely through virtual platform with no corresponding in-person physical
meeting) will be assessed on a case-by-case basis. Companies have a responsibility
to provide strong justification and establish safeguards to preserve comparable rights and opportunities
for shareholders to participate virtually as they would have during an in-person meeting.
Invesco will consider, among other things, a company’s practices, jurisdiction and disclosure, including the items set forth below:
i.
meeting procedures and requirements are disclosed in advance of a meeting detailing
the rationale for eliminating the in-person meeting;
ii.
clear and comprehensive description of which shareholders are qualified to participate,
how shareholders can join the virtual-only meeting, how and when shareholders submit and
ask questions either in advance of or during the meeting;
iii.
disclosure regarding procedures for questions received during the meeting, but not
answered due to time or other restrictions; and
iv.
description of how shareholder rights will be protected in a virtual-only meeting
format including the ability to vote shares during the time the polls are open.
C.
Board Composition and Effectiveness
Director election process: Board members should generally stand for election annually and individually.
●
We will generally support proposals requesting that directors stand for election annually.
●
We will generally vote against the incumbent governance committee chair or nearest equivalent, if a company has a classified board structure that is not being phased out. We may
make exceptions to this policy for non-operating companies (e.g., open-end and closed-end
investment companies) or in regions where market practice is for directors to stand for election on a
staggered basis.
●
When a board is presented for election as a slate (e.g., shareholders are unable to
vote against individual nominees and must vote for or against the entire nominated slate of directors)
and this
E-11
approach is not aligned with local market practice, we will generally vote against
the slate in cases where we otherwise would vote against an individual nominee.
●
Where market practice is to elect directors as a slate we will generally support the
nominated slate unless there are governance concerns with several of the individuals included
on the slate or we have broad concerns with the composition of the board such as a lack independence.
Board size: We will generally defer to the board with respect to determining the optimal number
of board members given the size of the company and complexity of the business, provided
that the proposed board size is sufficiently large to represent shareholder interests and sufficiently
limited to remain effective.
Board assessment and succession planning: When evaluating board effectiveness, Invesco considers whether periodic performance reviews and skills assessments are conducted
to ensure the board represents the interests of shareholders. In addition, boards should have a
robust succession plan in place for key management and board personnel.
Definition of independence: Invesco considers local market definitions of director independence but applies a proprietary standard for assessing director independence considering a director’s status as a current or former employee of the business, any commercial or consulting relationships
with the company, the level of shares beneficially owned or represented and familial relationships,
among others.
Board and committee independence: The board of directors, board committees and regional equivalents should be sufficiently independent from management, substantial shareholders
and conflicts of interest. We consider local market practices in this regard and in general we look
for a balance across the board of directors. Above all, we like to see signs of robust challenge
and discussion in the boardroom.
●
We will generally vote against one or more non-independent directors when a board
is less than majority independent, but we will take into account local market practice with regards
to board independence in limited circumstances where this standard is not appropriate.
●
We will generally vote against non-independent directors serving on the audit committee.
●
We will generally vote against non-independent directors serving on the compensation
committee.
●
We will generally vote against non-independent directors serving on the nominating
committee.
●
In relation to the board, compensation committee and nominating committee we will
consider the appropriateness of significant shareholder representation in applying this policy.
This exception will generally not apply to the audit committee.
Separation of Chair and CEO roles: We believe that independent board leadership generally enhances management accountability to investors. Companies deviating from this best
practice should provide a strong justification and establish safeguards to ensure that there is independent
oversight of a board’s activities (e.g., by appointing a lead or senior independent director with clearly defined powers and responsibilities).
●
We will generally vote against the incumbent nominating committee chair, or nearest equivalent, where the board chair is not independent unless a lead independent or senior director
is appointed.
●
We will generally support shareholder proposals requesting that the board chair be
an independent director.
●
We will generally not vote against a CEO or executive serving as board chair solely
on the basis of this issue, however, we may do so in instances where we have significant concerns
regarding a company’s corporate governance, capital allocation decisions and/or compensation practices.
E-12
Attendance and over boarding: Director attendance at board and committee meetings is a fundamental part of their responsibilities and provides efficient oversight for the
company and its investors. In addition, directors should not have excessive external board or managerial
commitments that may interfere with their ability to execute the duties of a director.
●
We will generally vote against or withhold votes from directors who attend less than 75% of board and committee meetings for two consecutive years. We expect companies to disclose any extenuating circumstances, such as health matters or family emergencies, that would justify a director’s low attendance, in line with good practices.
●
We will generally vote against directors who have more than four total mandates at
public operating companies. We apply a lower threshold for directors with significant commitments
such as executive positions and chairmanships.
Diversity: We believe an effective board should be comprised of directors with a mix of skills, experience, tenure, and industry expertise together with a diverse profile of individuals of different
genders, ethnicities, race, culture, age, perspectives and backgrounds. The board should reflect the diversity of the workforce, customers, and the communities in which the business operates.
In our view, greater diversity in the boardroom contributes to robust challenge and debate, avoids groupthink, fosters innovation, and provides competitive advantage to companies. We consider diversity at the board level, within the executive management team and in the succession pipeline.
●
In markets where there are regulatory expectations, listing standards or minimum quotas
for board diversity, Invesco will generally apply the same expectations. In all other markets, we will generally vote against the incumbent nominating committee chair of a board, or nearest equivalent, where a company failed to demonstrate improvements are being made to diversity practices for three or more consecutive years, recognizing that building a qualified and diverse board takes time. We may make exceptions to this policy for non-operating companies (e.g., open-end and closed-end investment companies).
●
We generally believe that an individual board’s nominating committee is best positioned to determine whether director term limits would be an appropriate measure to help achieve
these goals and, if so, the nature of such limits. Invesco generally opposes proposals to
limit the tenure of outside directors through mandatory retirement ages.
D.
Long-Term Stewardship of Capital
Capital allocation: Invesco expects companies to responsibly raise and deploy capital toward the long-term, sustainable success of the business. In addition, we expect capital allocation authorizations
and decisions to be made with due regard to shareholder dilution, rights of shareholders
to ratify significant corporate actions and pre-emptive rights, where applicable.
Share issuance and repurchase authorizations: We generally support authorizations to issue shares up to 20% of a company’s issued share capital for general corporate purposes. Shares should not be issued at a substantial discount to the market price or be repurchased at a substantial
premium to the market price.
Stock splits: We generally support management proposals to implement a forward or reverse stock
split, provided that a reverse stock split is not being used to take a company private.
In addition, we will generally support requests to increase a company’s common stock authorization if requested to facilitate a stock split.
Increases in authorized share capital: We will generally support proposals to increase a company’s number of authorized common and/or preferred shares, provided we have not identified
concerns regarding a company’s historical share issuance activity or the potential to use these authorizations for antitakeover purposes. We will consider the amount of the request in relation to the company’s current authorized share capital, any proposed corporate transactions contingent on approval
of these requests
E-13
and the cumulative impact on a company’s authorized share capital, for example, if a reverse stock split is concurrently submitted for shareholder consideration.
Mergers, acquisitions, proxy contests, disposals and other corporate transactions: Invesco’s investment teams will review proposed corporate transactions including mergers, acquisitions,
reorganizations, proxy contests, private placements, dissolutions and divestitures based on a proposal’s individual investment merits. In addition, we broadly approach voting on other corporate
transactions as follows:
●
We will generally support proposals to approve different types of restructurings that
provide the necessary financing to save the company from involuntary bankruptcy.
●
We will generally support proposals to enact corporate name changes and other proposals
related to corporate transactions that we believe are in shareholders’ best interests.
●
We will generally support reincorporation proposals, provided that management have
provided a compelling rationale for the change in legal jurisdiction and provided further that
the proposal will not significantly adversely impact shareholders’ rights.
●
With respect to contested director elections, we consider the following factors, among
others, when evaluating the merits of each list of nominees: the long-term performance of
the company relative to its industry, management’s track record, any relevant background information related to the contest, the qualifications of the respective lists of director nominees, the
strategic merits of the approaches proposed by both sides, including the likelihood that the proposed
goals can be met, and positions of stock ownership in the company.
E.
Environmental, Social and Governance Risk Oversight
Director responsibility for risk oversight: The board of directors are ultimately responsible for overseeing management and ensuring that proper governance, oversight and control mechanisms
are in place at the companies they oversee. Invesco may take voting action against director
nominees in response to material governance or risk oversight failures that adversely affect shareholder
value.
Invesco considers the adequacy of a company's response to material oversight failures
when determining whether any voting action is warranted. In addition, Invesco will consider
the responsibilities delegated to board sub-committees when determining if it is appropriate to hold the incumbent chair of the relevant committee, or nearest equivalent, accountable for these material failures.
Material governance or risk oversight failures at a company may include, without limitation:
i.
significant bribery, corruption or ethics violations;
ii.
events causing significant climate-related risks;
iii.
significant health and safety incidents; or
iv.
failure to ensure the protection of human rights.
Reporting of financially material ESG information: Companies should report on their environmental, social and governance opportunities and risks where material to their business operations.
●
Climate risk management: We encourage companies to report on material climate-related
risks and opportunities and how these are considered within the company’s strategy, financial planning, governance structures and risk management frameworks aligned with applicable regional regulatory requirements. For companies in industries that materially contribute to climate change, we encourage comprehensive disclosure of greenhouse gas emissions and Paris-aligned emissions reduction targets, where appropriate. Invesco may take voting action
at companies that fail to adequately address climate-related risks, including opposing
director nominations in cases where we view the lack of effective climate transition risk management
as potentially detrimental to long-term shareholder value.
E-14
Shareholder proposals addressing environmental and social issues: We recognize environmental and social (E&S) shareholder proposals are nuanced and therefore, Invesco will analyze
such proposals on a case-by-case basis.
Invesco may support shareholder resolutions requesting that specific actions be taken
to address E&S issues or mitigate exposure to material E&S risks, including reputational risk, related
to these issues. When considering such proposals, we will consider the following but not limited to: a company's track record on E&S issues, the efficacy of the proposal's request, whether the requested
action is unduly burdensome, and whether we consider the adoption of such a proposal would promote
long-term shareholder value. We will also consider company responsiveness to the proposal and
any engagement on the issue when casting votes.
We generally do not support resolutions where insufficient information has been provided
in advance of the vote or a lack of disclosure inhibits our ability to make fully informed voting
decisions.
Ratification of board and/or management acts: We will generally support proposals to ratify the actions of the board of directors, supervisory board and/or executive decision-making
bodies, provided there are no material oversight failures as described above. When such oversight concerns
are identified, we will consider a company’s response to any issues raised and may vote against ratification proposals instead of, or in addition to, director nominees.
F.
Executive Compensation and Alignment
Invesco supports compensation polices and equity incentive plans that promote alignment
between management incentives and shareholders’ long-term interests. We pay close attention to local market practice and may apply stricter or modified criteria where appropriate.
Advisory votes on executive compensation, remuneration policy and remuneration reports: We will generally not support compensation-related proposals where more than one of the
following is present:
i.
there is an unmitigated misalignment between executive pay and company performance
for at least two consecutive years;
ii.
there are problematic compensation practices which may include, among others, incentivizing excessive risk taking or circumventing alignment between management and shareholders’ interests via repricing of underwater options;
iii.
vesting periods for long-term incentive awards are less than three years;
iv.
the company “front loads” equity awards;
v.
there are inadequate risk mitigating features in the program such as clawback provisions;
vi.
excessive, discretionary one-time equity grants are awarded to executives;
vii.
less than half of variable pay is linked to performance targets, except where prohibited
by law.
Invesco will consider company reporting on pay ratios as part of our evaluation of
compensation proposals, where relevant.
Equity plans: Invesco generally supports equity compensation plans that promote the proper alignment
of incentives with shareholders’ long-term interests, and generally votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features
which may include provisions to reprice options without shareholder approval, plans that include evergreen
provisions or plans that provide for automatic accelerated vesting upon a change in control.
Employee stock purchase plans: We generally support employee stock purchase plans that are reasonably designed to provide proper incentives to a broad base of employees, provided
that the price at which employees may acquire stock represents a reasonable discount from the market
price.
E-15
Severance Arrangements: Invesco considers proposed severance arrangements (sometimes known as “golden parachute” arrangements) on a case-by-case basis due to the wide variety among their terms. Invesco acknowledges that in some cases such arrangements, if reasonable, may be in shareholders’ best interests as a method of attracting and retaining high-quality executive talent.
We generally vote in favor of proposals requiring shareholder ratification of senior executives’ severance agreements where the proposed terms and disclosure align with good market practice.
E-16
Exhibit A
Harbourview Asset Management Corporation
Invesco Advisers, Inc.
Invesco Asset Management (India) Pvt. Ltd*1
Invesco Asset Management (Japan) Limited*1
Invesco Asset Management (Schweiz) AG
Invesco Asset Management Deutschland GmbH
Invesco Asset Management Limited1
Invesco Asset Management Singapore Ltd
Invesco Australia Ltd
Invesco European RR L.P.
Invesco Canada Ltd.1
Invesco Capital Management LLC
Invesco Capital Markets, Inc.*1
Invesco Fund Managers Limited
Invesco Hong Kong Limited
Invesco Investment Advisers LLC
Invesco Investment Management (Shanghai) Limited
Invesco Investment Management Limited
Invesco Loan Manager, LLC
Invesco Managed Accounts, LLC
Invesco Management S.A.
Invesco Overseas Investment Fund Management (Shanghai) Limited
Invesco Pensions Limited
Invesco Private Capital, Inc.
Invesco Real Estate Management S.a.r.l1
Invesco RR Fund L.P.
Invesco Senior Secured Management, Inc.
Invesco Taiwan Ltd*1
Invesco Trust Company
Oppenheimer Funds, Inc.
WL Ross & Co. LLC
* Invesco entities with specific proxy voting guidelines
1 Invesco entities with specific conflicts of interest policies
E-17
Invesco Japan Proxy Voting Guideline
Invesco Japan (hereinafter “we” or “our) votes proxies to maximize the interests of our clients (investors) and beneficiaries in the long term, acknowledging the importance of corporate governance
based on fiduciary duties to our clients (investors) and beneficiaries. We do not vote proxies
for the interests of ourselves and any third party other than clients (investors) and beneficiaries. The
interests of clients (investors) and beneficiaries are to expand the corporate value or the shareholders’ economic interests or prevent damage thereto. Proxy voting is an integral part of our stewardship activities,
and we make voting decisions considering whether the proposal would contribute to corporate value expansion
and sustainable growth.
To vote proxies adequately, we have established the Responsible Investment Committee
and developed the Proxy Voting Guideline to govern the decision-making process of proxy voting. While
we may seek advice from an external service provider based on our own guidelines, our investment professionals
make voting decisions in principle, based on the proxy voting guideline, taking into account whether
they contribute to increasing the subject company’s shareholder value.
Responsible proxy voting and constructive dialogue with investee companies are important
components of stewardship activities. While the Proxy Voting Guideline are principles for our voting
decisions, depending on the proposals, we may make an exception if we conclude that such a decision is
in the best interests of clients (investors) and beneficiaries after having constructive dialogue with the
investee companies. In such a case, approval of the Responsible Investment Committee shall be obtained.
The Responsible Investment Committee consists of members including Chief Investment
Officer, as the chair, Head of Compliance, Head of ESG, investment professionals nominated by the
chair and the other members, including persons in charge at the Client Reporting department.
We have established the Conflict of Interest Management Policy. In the situation that
may give rise to a conflict of interest, we aim to control it in the best interests of clients (investors)
and beneficiaries. The Compliance department is responsible for governing company-wide control of a conflict
of interest. The Compliance department is independent of Investment and Sales departments and shall
not receive any command or order for the matters compliant with the laws and regulations, including
a conflict of interest, from them.
Proxy Voting Guidelines
1. Appropriations of Retained Earnings and Dividends
We decide how to vote on proposals seeking approval for appropriations of retained
earnings and dividends, taking into account the subject company’s financial conditions and business performance, shareholders’ economic interests and so on.
●
Taking into account the company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly low, we
consider voting against the proposals unless reasonable explanations are given by the company.
●
With respect to the company where the Board of Directors determines appropriations
of retained earnings, taking into account the subject company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly
low, we consider voting against the reappointment of board directors unless reasonable explanations
are given by the company.
●
Taking into account the subject company’s capital adequacy, business strategies, and so on if the total payout ratio, including dividends and share repurchases, is significantly low,
we consider voting for shareholder proposals increasing shareholder returns.
E-19
2. Appointment of Board Directors
We decide how to vote on proposals concerning the appointment of board directors,
taking into account their independence, competence, anti-social activity records (if any), and so on.
Furthermore, we decide how to vote on the reappointment of board directors, taking into account their corporate
governance practices, accountability during their tenures, the company’s business performance and anti-social records (if any), and so on in addition to the above factors.
Board directors should make best efforts to continuously gain knowledge and skills
to fulfill the critical role and responsibilities in the company’s governance. A company should also provide sufficient training opportunities.
Independent outside directors are expected to play a significant role, such as safeguarding
minority shareholders’ interests through action based on their insights to increase the company’s corporate value. It is desirable to enhance the board’s governance function with independent outside directors accounting for the board majority. However, given the challenge to secure competent candidates, we
also recognize that it is difficult for all the companies, irrespective of their size, to deploy the independent outside directors’ majority on the Board.
Sufficient disclosure is a prerequisite for reflecting the assessment of independence
and suitability of director candidates and board composition in voting decisions. Currently, there are
cases where sufficient information cannot be obtained due to insufficient disclosure on a board chair, each committee’s function and committee chairs in Notice of Annual General Meeting (AGM) and a corporate governance
report, as well as untimeliness of these issuances. We generally make decisions based on Notice
of AGM, a corporate governance report and an annual securities report disclosed by the time of voting.
However, this shall not apply if we obtain such information from direct engagement with the company or find
relevant disclosure elsewhere.
(1)
Independence
We generally vote for the appointment of outside directors. However, we generally
vote against if a candidate is not regarded as independent of the subject company. It is desirable that
the company discloses information, such as numerical data, which supports our decision on board independence.
●
We view the following outside director candidates are not independent enough.
●
Candidates who have been working for the following companies for the last ten years
or are those people’s relatives.
●
The subject company
●
Its subsidiary
●
Its parent company
●
Candidates who have been working for the following companies for the last five years
or are those people’s relatives.
●
Shareholders who own more than 10% of the subject company
●
Principal loan lenders
●
Principal securities brokers
●
Major business partners
●
Auditors
●
Audit companies, consulting companies or any related service providers which have
any consulting contracts with the subject company
●
Any other counterparts which have any interests in the subject company
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In cases other than above, we separately scrutinize the independence of candidates
who are regarded as not independent enough.
●
We take extra care when we assess the independence of candidates from a company which
is regarded as a policy shareholder under cross shareholding, mutually sends outside directors
to each other, and so on, as such cases potentially raise doubts about their independence. The company should
give reasonable explanations. It is also desirable that the company contrives the timing
and method of disclosure to allow investors to understand those relationships enough.
●
We judge board independence according to the stock exchange’s independence criteria with emphasizing independence ensured practically. We consider each company’s business environment and make the best effort to engage with the subject company to determine the independence
of the candidates.
●
We regard an outside director with a significantly long tenure as non-independent
and consider voting against the reappointment of such an outside director. We generally consider voting
against the reappointment of outside directors whose tenures are longer than ten years.
●
If the subject company is a company with Audit Committee, we judge the independence
of outside director candidates who become audit committee board members using the same independence
criteria for the appointment of statutory auditors in principle.
●
We generally consider voting against the appointment of top executives and a nominating
committee chair at a company with three Committees if independent outside directors of the subject
company account for less than 1/3 of the Board after the AGM. However, this shall not apply
if we confirm sufficient planning or special circumstances on increasing the number of independent
outside directors in engagements.
●
In case the subject company has a parent company, we generally consider voting against
the appointment of top executives and a nominating committee chair at a company with three
Committees if independent outside directors account for less than half of the Board after the AGM.
However, this shall not apply if we confirm sufficient planning or special circumstances on increasing
the number of independent outside directors in engagements.
(2)
Attendance rate and concurrent duties
●
All members are expected to attend board and respective committee meetings in principle.
A Company is generally obligated to facilitate all members to attend these meetings. We generally
vote against the reappointment of board directors who attended less than 75% of board or respective
committee meetings.
●
We take into account not only the number of attendance but nomination reasons and candidates’ real contributions if disclosed.
●
We take extra care when we assess the capability of board directors who have many
concurrent duties as an outside director or outside statutory auditor of listed companies, as
such cases potentially arise doubts about their capacity given the importance of outside directors’ role and responsibilities. Accordingly, we consider voting against the appointment of board
directors who perform five or more duties as a director or statutory auditor of a listed company
or equivalent company.
●
If a company nominates a board director with many concurrent duties, it should provide
reasonable explanations. It is also desirable that the company contrives disclosure timing and
methods to allow investors to understand the situation enough.
(3)
Company’s business performance
●
We consider voting against the reappointment of board directors if the subject company
made a loss for the three consecutive years during their tenures.
E-21
●
We consider voting against the reappointment of board directors if we judge that the subject company’s business performance significantly lags the peers in the same industry during their
tenures.
●
We consider voting against top executives if, concerning capital efficiency including
return on capital, business strategies achieving corporate value expansion and sustainable growth are
not demonstrated, and constructive dialogues are not conducted.
(4)
Company’s anti-social activities
●
If we judge that a corporate scandal damages or is likely to damage shareholder value
with having a significant effect on society during a board tenure, we conduct adequate dialogues
with the subject company on the background and subsequent resolutions of the scandal. Based on the
dialogues, we decide how to vote on the reappointment of top executives, board directors in charge
of those cases and audit committee board members at a company with Audit Committee or three Committees,
considering the impact on shareholder value.
●
With respect to domestic corporate scandals, at the time a company receives administrative
dispositions to cartel, bid-rigging, and so on from authorities, such as the Fair
Trade Commission, we consider voting against the reappointment of top executives, directors in charge and
audit committee board members at a company with Audit Committee or three Committees. However, in case
final dispositions are subsequently determined based on appeal or complaints resolutions,
we do not vote against the reappointment again at that time. We vote on a case-by-case basis concerning
compensation orders in a civil case, dispositions from the Consumer Affairs Agency
or administrative dispositions from overseas authorities.
●
With respect to administrative dispositions to an unlisted subsidiary or affiliate,
we consider voting against the reappointment of top executives, directors in charge and audit committee
board members at a company with Audit Committee or three Committees of the holding or parent company.
If a subsidiary or affiliate is listed, we consider voting against the reappointment of
top executives, directors in charge and audit committee board members at a company with Audit Committee
or three Committees of both the subsidiary or affiliate and the holding or parent company.
However, we may vote on a case-by-case basis, depending on the importance of the disposition to the
subsidiary or affiliate, its impact on the holding or parent company’s financial performance, and so on.
●
With respect to employees’ scandals, if the scandal damages or is likely to damage shareholder value, and we judge that the subject company owes management responsibility, we consider
voting against the reappointment of top executives, directors in charge and audit committee
board members at a company with Audit Committee or three Committees.
●
We consider voting against the reappointment of board directors if the subject company
engages in window dressing or inadequate accounting practices during their tenures.
(5)
Activities against shareholder interest
●
If a company raises capital through an excessively dilutive third-party allotment without a shareholders’ meeting’s approval, we consider voting against the reappointment of board directors, particularly top executives.
●
If a company raises capital through a large-scale public offering without reasonable
explanations, we consider voting against the reappointment of board directors, particularly top executives.
●
If a company does not execute a shareholder proposal regarded as favorable for minority
shareholders receiving the majority support from shareholders or does not make a similar company
proposal at an AGM in the following year, we consider voting against the appointment of top executives.
(6)
Others
●
If a company insufficiently discloses board director candidates’ information, we generally vote against such candidates.
E-22
3. Composition of Board of Directors
While each company’s board structure would differ depending on its size and so on, we believe that a company with three Committees (Nomination, Audit and Remuneration) is desirable to
achieve better governance as a listed company. For a company with Board of Statutory Auditors (Kansayaku)
or Audit Committee, it is also desirable to voluntarily deploy a Nomination Committee, a Remuneration
Committee and other necessary committees. Besides, it is desirable that Board Chair is an independent
outside director. We believe that a highly transparent board composition ensures management
accountability and contributes to sustained enterprise value expansion. Finally, the disclosure of the
third-party assessment on the Board of Directors is desirable.
To strengthen the Board of Directors’ monitoring function and increase its transparency and effectiveness, we believe it is important to ensure gender, nationality, career, and age diversity
in principle. It is desirable that each company adopts a skills matrix that defines the diversity and expertise
required to fulfill the Board’s responsibilities reflecting its situation and selects director candidates accordingly.
We are concerned about retired directors assuming consulting, advisory or other similar
positions which could negatively impact transparency and decision making of the Board. If such positions
exist, and retired directors assume them, it is desirable that the company discloses their existence,
their expected roles and contributions and compensations for such posts.
(1)
Number of board members and change in board composition
●
We decide how to vote on proposals concerning the number of board members and change
in board composition, taking into account the impacts on the subject company and shareholders’ economic interests compared to the current situations.
●
The number of board members should be optimized to make the right management decision
at the right time. We may consider each company’s business situation and scale. However, we generally consider voting against the appointment of top executives and a nominating committee
chair at a company three Committees if the number of board members is expected to exceed 20 without
decreasing from the previous AGM, and reasonable explanations are not given.
●
We generally vote against the appointment of top executives and a nomination committee
chair at a company three Committees if a decrease in outside directors or an increase in internal
directors reduces the percentage of outside directors to less than half of the board members.
●
If there are no females on the Board, we consider voting against the appointment of
top executives and a nomination committee chair at a company three Committees. However, this shall
not apply if we confirm sufficient planning or special circumstances on increasing the number of
female directors in engagements.
●
We believe that board diversity is important and may set a higher target for a female
board member ratio in the future. Similarly, we may set a racial and nationality diversity
target, especially for companies with global business operations.
(2)
Procedures of board director appointment, scope of their responsibilities and so on
●
We decide how to vote on proposals concerning change in board director appointment
procedures, taking into account the rationales, and so on, compared to the current procedures.
●
We generally vote against proposals reducing board directors’ responsibilities for financial damages on fiduciary duty breach.
●
Board directors’ responsibilities include effective monitoring of top executives succession planning. The Nomination Committee at a company with three Committees or the arbitrary Nomination
Committee created at a company with the other governance structures should provide effective
monitoring of successor development and appointment with transparency. It is desirable that an independent
outside
E-23
director serves as Nomination Committee Chair. If we judge that the succession procedure
significantly lacks transparency and rationality, we consider voting against the appointment of
top executives.
4. Appointment of Statutory Auditors (Kansayaku)
We decide how to vote on proposals concerning the appointment of statutory auditors,
taking into account their independence, competence and anti-social activities records (if any), and so
on. We decide how to vote on the reappointment of statutory auditors, taking into account their corporate
governance practices and accountability during their tenures, the company’s anti-social activity records, and so on in addition to the above factors.
Statutory auditors and audit committee board directors at a company with Audit committee
or three Committees should have deep knowledge specialized in accounting, laws and regulations
and should make best efforts to continuously gain knowledge and skills to fulfill the critical role
and responsibilities in the company’s governance. A company should also provide sufficient training opportunities.
(1)
Independence
●
We generally vote against the appointment of outside statutory auditors without independency.
●
In general, a person who has no relationship with the subject company other than a
statutory auditor appointment is regarded as independent.
●
We regard that an outside statutory auditor with a significantly long tenure is not
independent and generally vote against the reappointment of such an outside statutory auditor. We
generally consider voting against the candidate whose tenure is longer than ten years.
(2)
Attendance rate and concurrent duties
●
All statutory auditors are expected to attend board or board of statutory auditors
meetings in principle. A companies is generally obligated to facilitate all statutory auditors to attend these
meetings. We generally vote against the reappointment of statutory auditors who attended less than 75% of
board or board of statutory auditors meetings.
●
We take into account not only the number of attendance but nomination reasons and candidates’ real contributions if disclosed.
●
We take extra care when we assess the capability of statutory auditors who have many
concurrent duties as an outside director or outside statutory auditor of listed companies, as
such cases potentially arise doubts about their capacity given the importance of outside statutory auditors’ role and responsibilities. Accordingly, we consider voting against the appointment of statutory
auditors who perform five or more duties as a board director or statutory auditor of a listed
company or equivalent company. If a company nominates a statutory auditor with many concurrent
duties, it should give reasonable explanations. It is also desirable that the company contrives
disclosure timing and methods to allow investors to understand the situation enough.
(3)
Accountability
●
If there are material concerns about a published audit report or audit procedures,
or insufficiencies of required disclosures, we vote against the reappointment of statutory auditors.
(4)
Company’s anti-social activities
●
If we judge that a corporate scandal damages or is likely to damage shareholder value
with having a significant impact on society during a statutory auditor’s tenure, we conduct adequate dialogues with the subject company on the background and subsequent resolutions of the scandal. Based
on the dialogues, we decide how to vote on the reappointment of statutory auditors, considering the
impact on shareholder value.
●
With respect to domestic corporate scandals, at the time a company receives administrative
E-24
dispositions to cartel, bid-rigging, and so on from authorities, such as the Fair
Trade Commission, we consider voting against the reappointment of statutory auditors. However, in case
the final dispositions are subsequently determined based on appeal or complaints resolutions,
we do not vote against the reappointment again at that time. We vote on a case-by-case basis concerning
compensation orders in a civil case, dispositions from the Consumer Affairs Agency
or administrative dispositions from overseas authorities.
●
With respect to administrative dispositions to an unlisted subsidiary or affiliate,
we consider voting against the reappointment of statutory auditors of the holding or parent company.
If a subsidiary or affiliate is listed, we consider voting against the reappointment of statutory auditors
of both the subsidiary or affiliate and the holding or parent company. However, we may decide
on a case-by-case basis, depending on the importance of the dispositions to the subsidiary or affiliate,
its impact on the holding or parent company’s financial performance, and so on.
●
With respect to employees’ scandals, if the scandal damages or is likely to damage shareholder value, and we judge that the subject company owes management responsibility, we consider
voting against the reappointment of statutory auditors.
●
We consider voting against the reappointment of statutory auditors if the subject
company engages in window-dressing or inadequate accounting practices during their tenures.
5. Composition of Board of Statutory Auditors (Kansayaku)
We decide how to vote on proposals concerning the number of members or change in composition
of the board of statutory auditors, taking into account the impact on the subject company and shareholders’ economic interests compared to the current situations.
●
We consider an increase in statutory auditors favorably. However, in case of a decrease,
we consider voting against the reappointment of top executives unless clear and reasonable explanations
are given.
6. Appointment of Accounting Auditors
We decide how to vote on proposals concerning the appointment and replacement of accounting
auditors, taking into account their competence, audit fee levels, and so on.
●
We generally vote against the reappointment of statutory auditors (Kansayaku) or audit
committee board members at a company with Audit Committee or three Committees if we judge that a company
reappoints an accounting auditor without replacing it despite the following accounting
audit problems.
●
It is determined that an accounting auditor provides an unfair opinion on the company’s financial conditions.
●
In case there are concerns on financial statements, required disclosures are insufficient.
●
In case an accounting auditor has a service contract other than accounting audit services
with the subject company, it is regarded that such a contract creates a conflict of interest
between them.
●
Excessive audit fees are paid.
●
It is regarded that an accounting auditor makes fraud or negligence.
●
If it is regarded that an accounting auditor has issues in other company’s audits, in case a company appoints or reappoints the accounting auditor without replacing it, we take the impact on the company’s corporate value full consideration into voting decisions.
●
We generally vote against proposals concerning accounting auditor replacement if it
is regarded that a company changes an incumbent accounting auditor due to a dispute about accounting
principles.
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7. Compensation for Board Directors, Statutory Auditors (Kansayaku) and Employees
(1)
Board directors’ salaries and bonuses
●
It is desirable to increase the proportion of stock incentive plans in board directors’ salaries and bonuses, on condition that a performance-based compensation structure is established, transparency,
such as disclosures of a benchmark or formula laying the foundations for calculation, ensures
accountability, and the impact on shareholders, such as dilution, are taken into considerations. The Remuneration
Committee at a company with three Committees (Nomination, Audit and Remuneration)
or the arbitrary Remuneration Committee preferably deployed at a company with the other governance
structures should ensure the accountability of compensation schemes. It is desirable that an independent
outside director serves as Remuneration Committee Chair.
●
We consider voting against proposals seeking approval for salaries and bonuses in
the following cases.
●
Negative correlation between company’s financial performance and directors’ salaries and bonuses are observed.
●
Inappropriate systems and practices are in place.
●
The total amount of salaries and bonuses is not disclosed.
●
Management failures, such as a significant share price decline or serious earnings
deterioration, are apparent.
●
The remuneration proposal includes people determined to be responsible for activities
against shareholder interest.
●
We generally vote for shareholder proposals requesting disclosure of individual directors’ salaries and bonuses.
●
If a company implements any measures ensuring transparency other than disclosure,
we take it into consideration.
●
If there is no proposal seeking approval for directors’ salaries and bonuses, and the compensation structure lacks transparency, we consider voting against the appointment of top executives.
●
We generally vote against bonuses for statutory auditors at a company with Board of
Statutory Auditors and audit committee board members at a company with Audit Committee.
●
We separately consider voting to audit committee board members at a company with three
Committees.
(2)
Stock incentive plans
●
We decide how to vote on proposals concerning stock incentive plans, including stock
options and restricted stock units, taking into account the impact on shareholder value and rights,
compensation levels, the scope, the rationales, and so on.
●
We generally vote against proposals seeking to lower the strike price of stock options.
●
We generally vote for proposals seeking to change the strike price on condition that shareholders’ approval is required every time.
●
We generally vote against stock incentive plans if the terms and conditions for exercising
options, including equity dilution, lack transparency. We generally consider voting against
proposals potentially causing 10% or more equity dilution.
●
It is desirable that stock incentive plans is a long-term incentive aligned with sustainable
growth and corporate value expansion. As such, we generally vote against stock incentive plans
allowing recipients to exercise all the rights within two years after vested for the subject
fiscal year. However,
E-26
this shall not apply to recipients who retire during the subject fiscal year. We assess
the validity if a vesting period is regarded as too long.
●
We generally vote against stock incentive plans granted to statutory auditors and
audit committee board members at a company with Audit Committee.
●
We separately consider stock incentive plans granted to audit committee board members,
including both inside and outside directors, at a company with three Committees.
●
We generally vote against stock incentive plans granted to any third parties other
than employees.
●
We generally vote against stock incentive plans in case a company is likely to adopt
the plans as takeover defense.
(3)
Employee stock purchase plan
●
We decide how to vote on proposals concerning employee stock purchase plans, taking
into account the impact on shareholder value and rights, the scope and the rationales, and so on.
(4)
Retirement benefits for board directors
●
We decide how to vote on proposals concerning grant of retirement benefits, taking
into account the scope and scandals (if any) of recipients and business performance and scandals (if
any) of the subject company, and so on.
●
We generally vote for proposals granting retirement benefits if all the following
criteria are satisfied.
●
The granted amount is disclosed.
●
Outside directors, statutory auditors and audit committee board members at a company
with Audit Committees are excluded.
●
Recipients do not cause any significant scandals during their tenures.
●
The subject company does not make a loss for the three consecutive years, or its business
performance is not determined to significantly lag behind the peers in the same industry.
●
The company does not cause scandals that significantly impact society and damage,
or are unlikely to damage, shareholder value during their tenures.
●
The company does not engage in window-dressing or inadequate accounting practices
during their tenures.
8. Cross-shareholdings
If a company holds shares for the sake of business relations (cross shareholdings),
the company should explain the medium- to long-term business and financial strategies, including capital
costs, and disclose proxy voting guidelines, voting results, and so on. If the company does not give reasonable
explanations and engage in constructive dialogues, we consider voting against the appointment of
top executives. It is important that the company does not hinder the sales/reduction of cross shareholdings
when a policy shareholder intends.
●
If a company's cross shareholdings account for 20% or more of its net assets, we generally
consider voting against the appointment of top executives. However, this shall not apply if
we confirm that the company makes a reduction, does sufficient planning or has industry- specific circumstances
that should be taken into consideration in engagement.
9. Capital Policy
As a listed companies’ capital policy is likely to significantly impact shareholder value and interests, a company should implement a rational capital policy and explain capital policy guidelines
to shareholders. We consider voting against proposals concerning capital policies that we judge damage
shareholder value. If a
E-27
company has a capital policy that is not part of proposals at an AGM but regarded
to damage shareholder value, we consider voting against the reappointment of board directors.
●
It is undesirable that a company intends to maintain or increase so-called “friendly” stable shareholders and infringes minority shareholders’ rights by the third-party allotment, treasury stocks transfer or company management holdings’ transfer to foundations affiliated with the company.
(1)
Change in authorized shares
●
We decide how to vote on proposals seeking to increase authorized shares, taking into
account the impact on shareholder value and rights, the rationales, the impact on the sustainability
of stock market listing and a going concern, and so on.
●
We generally vote for proposals seeking to increase authorized shares if we judge
that not increasing authorized shares is likely to lead to delisting or have a significant impact on a
going concern.
●
We generally vote against proposals seeking to increase authorized shares after an
acquirer emerges.
(2)
New share issue
●
We decide how to vote on new share issues, taking into account the rationales, the
terms and conditions of issues, the impact of dilution on shareholder value and rights and the impact on
the sustainability of stock market listing or a going concern, and so on.
(3)
Share repurchase and reissue
●
We decide how to vote on proposals concerning share repurchase or reissue, taking
into account the rationales, and so on.
(4)
Stock split
●
We generally vote for proposals seeking a stock split.
(5)
Consolidation of shares (reverse stock split)
●
We decide how to vote on proposals seeking consolidation of shares, taking into account
the rationale, and so on.
(6)
Preferred shares
●
We generally vote against proposals seeking to issue blank-cheque preferred shares
or increase authorized shares without specifying voting rights, dividends, conversion and other
rights.
●
We generally vote for proposals seeking to issue preferred shares or increase authorized
shares if voting rights, dividends, conversion and other rights are specified, and those rights are
regarded as reasonable.
●
We generally vote for proposals requiring approvals for preferred shares issues from
shareholders.
(7)
Convertible bonds
●
We decide how to vote on proposals seeking to issue convertible bonds, taking into
account the number of new shares, the time to maturity, and so on.
(8) Corporate bonds and credit facilities
●
We decide how to vote on proposals concerning a corporate bond issue or a credit facility
expansion, taking into account the subject company’s financial conditions, and so on.
(9) Debt capitalization
●
We decide how to vote on proposals seeking to change the number of authorized shares
or issue shares for debt restructuring, taking into account the terms and conditions of the change
or the issue, the impact
E-28
on shareholder value and rights, the rationales, the impact on the sustainability
of stock market listing and a going concern, and so on.
(10) Capital reduction
●
We decide how to vote on proposals concerning capital reduction, taking into account
the impact on shareholder value and rights, the rationales and the impact on the sustainability
of stock market listing and a going concern, and so on.
●
We generally vote for proposals seeking capital reduction following standard accounting
procedures.
(11) Financing plan
●
We decide how to vote on proposals concerning a financing plan, taking into account
the impact on shareholder value and rights, the rationales and the impact on the sustainability
of stock market listing and a going concern, and so on.
(12) Capitalization of reserves
●
We decide how to vote on proposals seeking capitalization of reserves, taking into
account the rationales, and so on.
10. Amendment to Articles of Incorporation and Other Legal Documents
(1) Change in an accounting period
●
We generally vote for proposals seeking to change an accounting period unless it is
regarded as an aim to delay an AGM.
(2) Amendment to articles of incorporation
●
We decide how to vote on proposals to amend an article of incorporation, taking into
account the impact on shareholder value and rights, the necessity, the rationales, and so on.
●
We generally vote for proposals seeking to amend an article of incorporation if it
is required by law.
●
We generally vote against proposals seeking to amend an article of incorporation if
we judge that it is likely to infringe shareholder rights or damage shareholder value.
●
We generally vote for transition to a company with three Committees.
●
We decide how to vote on proposals seeking to relax or eliminate special resolution
requirements, taking into account the rationale.
●
We are concerned about retired directors assuming advisory, consulting, or other similar
positions which could negatively impact on transparency and decision making of the Board of
Directors. We generally vote against proposals seeking to create such a position.
●
We generally vote for proposals seeking to authorize a company to hold virtual-only
meetings, taking into account the impact on shareholder value and rights.
●
We will consider, among other things, a company’s practices, jurisdiction and disclosure, including the items set forth below:
●
meeting procedures and requirements are disclosed in advance of a meeting detailing
the rationale for eliminating the in-person meeting,
●
safeguard and clear and comprehensive description as to how and when shareholders
submit and ask questions either in advance of or during the meeting,
●
disclosure regarding procedures for questions received during the meeting, but not
answered due to time or other restrictions, and
E-29
●
description of how shareholder rights will be protected in a virtual-only meeting
format including the ability to vote on proposals during the time the polls are open.
(3) Change in a quorum for an annual general meeting (AGM)
●
We decide how to vote on proposals concerning change in quorum for an AGM, taking
into account the impact on shareholder value and rights, and so on.
11. Company Organization Change
(1) Change in a registered company name and address
●
We decide how to vote on proposals seeking to change a registered company name, taking
into account the impact on shareholder value, and so on.
●
We generally vote for proposals seeking to change a registered address.
(2) Company reorganization
●
We decide how to vote on proposals concerning the following company reorganization,
taking into account their respective impacts on shareholder value and rights, the subject company’s financial conditions and business performance, and the sustainability of stock market listing
or a going concern, and so on.
Mergers and acquisitions
Business transfers
Company split (spin-off)
Asset sale
Company sale
Liquidation
12. Proxy Fight
(1)
Proxy fight
●
We decide how to vote on proposals concerning the appointment of directors with opposition
candidates, taking into account their independence, competence, anti-social activity records (if
any), corporate governance practices and accountability of the candidates and business performance
and anti-social activity records (if any) of the subject company, the proxy fight background, and
so on.
(2)
Proxy context defense
●
Classified board
●
We generally vote against proposals seeking to introduce a classified board.
●
We generally vote for proposals seeking to set a director's term of one year.
●
Shareholder rights to remove a director
●
We generally vote against proposals seeking to tighten requirements for shareholders
to remove a director.
●
Cumulative voting
●
We decide how to vote on proposals seeking to introduce cumulative voting for director
appointments, taking into account the background, and so on.
E-30
●
We decide how to vote on proposals seeking to terminate cumulative voting for director
appointment, taking into account the background, and so on.
13. Takeover Defense
We believe that management and shareholder interest is not always aligned. As such,
we generally vote against the creation, amendment and renewal of takeover defense measures that we judge
decrease shareholder value or infringes shareholder rights. We generally vote against the reappointment
of directors if takeover defense measures are not part of proposals at an AGM but are regarded to
decrease shareholder value or infringes shareholder rights.
●
Relaxing requirements to amend articles of incorporation and company policies
●
We decide how to vote on proposals seeking to relax requirements to amend articles
of incorporation or company policies, taking into account the impact on shareholder value and rights,
and so on.
●
Relaxing of requirements for merger approval
●
We decide how to vote on proposals seeking to relaxing requirements for merger approval,
taking into account the impact on shareholder value and rights, and so on.
14. Environment, Social and Governance (ESG)
We support the United Nations Principles for Responsible Investment (UN PRI) and acknowledge
that company’s ESG practices are an important factor in investment decision making. Thus, we consider voting against the reappointment of top executives and directors in charge if we judge that
there is an issue that could significantly damage corporate value. We consider voting for proposals related
to ESG materiality, including climate change or diversity, if we judge that such proposals contribute
to preventing from damaging or expanding corporate value. If not, we consider voting against such proposals.
15. Disclosure
Disclosure and constructive dialogues based thereon are important in proxy voting
and investment decision making. Furthermore, proactive disclosure and effective engagement are desirable as
demand for ESG disclosure, including climate change, has been increasing, and the disclosure frameworks
have been rapidly progressing.
●
We generally vote against proposals that lack sufficient disclosure to make proxy
voting decisions.
●
We generally vote for proposals seeking to enhance disclosures if such information
is beneficial to shareholders.
●
If a company’s financial and non-financial disclosures is significantly poor, and if the level of investor relations activities by management or people in charge is significantly low, we consider
voting against the reappointment of top executives and directors in charge.
16. Conflict of Interest
We abstain from voting proxies of the following companies that are likely to have
a conflict of interest. We also abstain from voting proxies with respect to the following investment trusts that
are managed by us or Invesco group companies, as a conflict of interest may rise.
●
Companies and investment trusts that we abstain from voting proxies:
●
Invesco Ltd.
We have established the Conflict of Interest Management Policy. In the situation that
may give rise to a conflict of interest, we aim to control it in the best interests of clients (investors)
and beneficiaries. The Compliance department is responsible for governing company-wide control of a conflict
of interest. The Compliance department is independent of the Investment and Sales departments and shall
not receive any
E-31
command or order for the matters compliant with the laws and regulations, including
a conflict of interest, from the Investment and Sales departments.
Proxy voting and stewardship activities are reported to the Responsible Investment
Committee. The Responsible Investment Committee approves them. Besides, the Compliance department
reviews whether conflicts of interest are properly managed in proxy voting and then reports the results
to the Conflict of Interest Oversight Committee. Furthermore, the results are reported to the Executive
Committee in Tokyo and the Invesco Proxy Advisory Committee.
17. Shareholder Proposals
We vote on a case-by-case basis on shareholder proposals while we follow the Proxy
Voting Guidelines in principle.
DISCLAIMER: The English version is a translation of the original in Japanese for information
purposes only. In case of a discrepancy, the Japanese original will prevail. You can
download the Japanese version from our website: http://www.invesco.co.jp/footer/proxy.html.
2092318-JP
E-32
Invesco Asset Management (India) Pvt. Ltd.
Voting Policy
A.
Preamble
SEBI vide its circular reference no. SEBI/IMD/Cir No.18/198647/2010 dated March 15,
2010 has stated that mutual fund should play an active role in ensuring better corporate governance of
listed companies. The said circular stated that the AMCs should disclose their general policies and procedures
for exercising the voting rights in respect of shares held by them.
Subsequently, SEBI vide its circular ref. no. CIR/IMD/DF/05/2014 dated March 24, 2014,
SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016, SEBI vide its circular ref. no.
CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019 and SEBI/HO/IMD/DF4/CIR/P/2021/29 dated March 5,
2021 have amended certain provisions of above mentioned circular specifying additional compliance
/ disclosure requirements with respect to exercise of voting rights by mutual funds so as to further
improve transparency as well as encourage Mutual Funds/AMCs to diligently exercise their voting rights
in best interest of the unitholders. In this respect, AMFI vide its best practices guidelines circular no.
35P/ MEM-COR/ 51/ 2020-21 dated March 09, 2021 has communicated that it would be mandatory for the Mutual Funds
to cast their votes ‘For’ or ‘Against’ and Abstention will not be counted as having voted.
This policy is drafted in pursuance of SEBI circular dated March 15, 2010 read with
March 24, 2014, August 10, 2016, December 24, 2019 and circular dated March 5, 2021 and provides general
philosophy, broad guidelines, procedures and principles for exercising voting rights.
Invesco Asset Management (India) Private Limited (“IAMI”) is an Investment Manager to the scheme(s) of Invesco Mutual Fund (“the Fund”). As an investment manager, IAMI has fiduciary responsibility to act in the best interest of unit-holders of the Fund. This responsibility includes exercising
voting rights attached to the securities of the companies in which the schemes of the Fund invest. It will be IAMI’s endeavor to participate in the voting process (i.e. exercise voting rights) based on the philosophy
enunciated in this policy.
B.
Philosophy of Voting Policy
Good corporate governance ensures that a corporation is managed keeping in mind the
long-term interest of shareholders. Promoting good corporate governance standards forms an integral part
of corporate ownership responsibilities.
With this in the forefront, IAMI expects all corporations, in which it invests in,
to comply with high corporate governance standards. Accordingly, as the decision to invest is generally an endorsement
of sound management practices, IAMI may generally vote with the management of these corporations.
However, when IAMI is of the view that the unit holders will be prejudiced by any such proposal,
then it may vote against such proposal to protect the interest of unit holders. Also, in case of resolutions
moved by the shareholders of the company, IAMI will exercise its voting rights in the best interest
of its unit holders. Other than matters mentioned under section D (I), in certain circumstances, IAMI may also
decide to refrain from voting where it has insufficient information or there is conflict of interest or it
does not have a clear stance on the proposal under consideration.
IAMI, as an investment manager, will generally vote in accordance with the Voting
Policy. However, it may deviate from the policy if there are particular facts and/or circumstances that warrant
for such deviation to protect the interests of unit-holders of the Fund.
C.
Conflict of Interest in Exercising Voting Rights
IAMI, under schemes, may invest in the securities of associate/group companies (to
the extent permitted under SEBI (Mutual Funds) Regulations, 1996 as amended from time to time). Further,
IAMI is an Indian subsidiary of global organization consisting of many affiliates. Moreover, schemes
under IAMI may invest in securities of companies which have invested in schemes of Invesco Mutual Fund. Such
scenarios may lead
E-35
to a situation creating conflict of interest. Potential Conflict of interest may also
arise if IAMI and the investee company are associates or are part of the same group; or the investee company
holds a material ownership interest in IAMI; a nominee of IAMI has been appointed as a director of
the investee company or having cross-directorships, the Investee Company is an entity participating in the
distribution of investment products advised or administered by the Investment Manager and/or any of its affiliate;
the Investee Company is a client of Investment Manager and/or its affiliates.
IAMI will attempt to avoid conflict of interest and will exercise its voting rights
in the best interest of the unit-holders. Voting decisions in such cases will be based on merits without any bias and the same
parameters will be applied for taking voting decisions as are applied for other companies.
In cases where there is a potential conflict of interest, IAMI will vote exactly as
per recommendations of the proxy voting advisory entity with no modifications whatsoever. In case there is need
for a clearer direction, the matter may be referred to the Investment committee for its guidance. Rationale
for decision taken/ voting on the issue shall be recorded.
D.
Voting Policy Guidelines
I. The matters regarding, but not limited to, which the IAMI will exercise the voting
rights in the Annual General Meeting (AGMs) /Extra Ordinary General Meeting (EGMs)/ Through Postal Ballots/Electronic
voting of the investee companies are as follows:
●
Corporate governance matters, including changes in the state of incorporation, merger
and other corporate restructuring and anti- takeover provisions.
●
Changes to capital structure, including increase and decrease of capital and preferred
stock issuances.
●
Stock option plans and other management compensation issues.
●
Social and corporate responsibility issues.
●
Appointment and Removal of Directors.
●
Any other issue that may affect the interest of the shareholders in general and interest
of the unit- holders in particular.
●
Related party transactions of the investee companies (excluding own group companies).
For this purpose, “Related Party Transactions” shall have same meaning as assigned to them in clause (zc) of Sub-Regulation (1) of Regulation (2) of the SEBI (Listing Obligation and Disclosure
Requirements) Regulations, 2015.
Effective April 01, 2021, voting shall be mandatory for all resolutions mentioned
above. Further, for all remaining resolutions which are not covered in (I) above, IAMI will compulsorily be
required to cast votes with effect from April 01, 2022.
II. In case of the Mutual Funds having no economic interest on the day of voting,
it may be exempted from compulsorily casting of votes.
III. The vote shall be cast at Mutual Fund Level. However, in case Fund Manager/(s)
of any specific scheme has strong view against the views of Fund Manager/(s) of the other schemes, the voting
at scheme level shall be allowed subject to recording of detailed rationale for the same.
IAMI will exercise voting rights keeping in mind the need to improve economic value
of the companies and importance of protecting the interests of unit holders of its schemes but subject
to importance of the matter and cost/time implications. The analysts in equity team will make recommendations
on key voting issues and same will be approved by the Head of Equity or Fund Manager. In case of conflicts
or need for a clearer direction, the matter may be referred to the Voting Committee for its guidance.
E-36
E.
Voting Committee
As a guiding principle, IAMI shall exercise voting rights solely in the interest of
unit holders of the Fund. IAMI has constituted a Voting Committee (VC).The Committee is empowered to provide
guidance on the voting matters referred to it, establish voting guidelines and procedures as it may
consider necessary and is responsible to ensure that these guidelines and procedures are adhered to and also
make changes in the Policy as may be required from time to time. The members of this Committee are as
follows:
●
CEO / COO/Head - Operations (any one)
●
Head of Compliance or Member of compliance team
●
Head of Equity or Fund Manager (equity)
●
Head of Fixed Income and/ or Fund Managers (fixed income)
●
Any other representative as the Committee may co-opt from time to time
Broad Guidelines for functioning of Voting Committee are:
1. Voting Committee may record its decisions by circulation including decisions/guidance
on voting matters that have been referred to it.
2. Voting Committee may consult with outside experts and other investors on issues
as it may deem fit.
3. Decisions of Voting Committee should be maintained by compliance.
4. Details of voting decisions taken by the Fund Management team will be presented
to the Voting Committee/Investment Committee.
5. Voting Committee may review this policy from time to time.
F.
Steps (Procedure) in Exercising Voting Rights
The following points outline the key steps in exercising Voting rights:
1) Notification of company AGMs / EGMs and relevant voting items to Fund Management
Team.
2) IAMI shall endeavor to vote for all holdings of the Fund aggregated for all its
schemes. The voting will cover all equity holding across all schemes of Invesco Mutual Fund including passive
investments like Index Funds, Exchange Traded Fund etc.
3) Custodian will send ballots and or other relevant papers (notice of meeting, proxy
form, attendance slips etc.) to IAMI relating to AGM/EGM as soon as it receives.
4) The fund management team is authorized to decide on voting decisions but may refer
decisions to the Voting Committee for its guidance/direction.
5) Based on internal discussion within the fund management team, a decision would
be arrived to vote on the proposed resolution. Routine matters and ordinary resolutions like adoption of
financials (unless there are significant auditor qualifications), dividend declaration, general updating/corrective
amendments to the Articles of Association would also be considered for voting purpose. However, IAMI may on a
case to case basis, not vote on such resolutions, if it deems fit to do so.
6) IAMI will generally support and vote “for” proposals which are likely to result in maximizing long-term investment returns for unit holders. IAMI would not support and will vote “against” proposals that appear to be detrimental to the company financials / interest of the minority shareholders or which
would adversely impact shareholders’ value.
7) IAMI may exercise its voting rights by authorizing its own executives/authorized
representative to attend the AGM/EGM or may instruct the Custodian to exercise voting rights in accordance
with the instructions of IAMI.
E-37
8) IAMI may exercise its voting rights through Postal Ballot or may use Electronic
voting mechanism, wherever available, either through its own executives or by authorizing the Custodian.
The records of voting exercised through Postal Ballot will be maintained by IAMI.
9) IAMI may utilize the services of third party professional agencies for getting
in-depth analyses of proposals and vote recommendations. However, the recommendations of the third party
agencies will be non-binding in nature. IAMI will perform due diligence on proxy voting advisory firms at the
time of initial selection as well as at the time of renewal of services of the proxy voting. The due diligence
will be carried out on parameters viz. resource strength, Companies under coverage, extent of institutional
ownership, depth of analysis, quality of advice / recommendations, analyst access & support, timely availability
of reports, composition of board of directors, advisory board and top management, web-based interface
platform and clientele.
10) The rationale supporting each voting decision (For, Against and Abstain) will
be recorded and such records will be retained for number of years (currently 8 years) as may be required
under the SEBI (Mutual Funds) Regulations, 1996 from time to time.
G.
Details of Service Provider
IIAS (Institutional Investor advisory Services) has been appointed as our proxy voting
advisor. The scope of the agreement with IIAS includes: IIAS shall provide non-binding Voting Recommendations
for each Voting Event for Investee companies, access to their research portal and analysts for any
discussion, access to their online voting management systems etc. The details of the service provider (currently
IIAS) are provided in the “Rationale for continuation of Proxy Voting advisory report” which is prepared once in 2 years. IIAS has standardized voting policies and has a committee-based voting decision making
system. Their analysis to arrive at the recommendations are detailed in nature and recommendations are fairly
objective. However, the recommendations of IIAS are non-binding in nature, and IAMI, reserves the right
to vote differently based on their own judgement on the matter involved.
H.
Disclosures
The disclosures of voting rights exercised are as follows:
●
Details of votes cast by the schemes of the Fund will be uploaded on the website of
IAMI (www.invescomutualfund.com) (in machine readable spreadsheet form) on a quarterly basis in the prescribed format within the stipulated timelines as prescribed by SEBI from time
to time.
●
Details of votes cast by the schemes of the Fund will be uploaded on the website of
IAMI (www.invescomutualfund.com) on an annual basis in the prescribed format. Further, AMCs shall provide the web link in the Annual Reports of the schemes of the Fund regarding the
disclosure of voting details.
●
Summary on actual exercise of votes cast and its break-up in terms of total number
of votes cast in favor, against or abstained will also be uploaded on the website of IAMI (www.invescomutualfund.com) on an annual basis.
I.
Certification/Confirmation
●
On an annual basis, IAMI will obtain a certification from scrutinizer (in terms of
Rule 20 (3) (ix) of Companies (Management and Administration) Rules, 2014) on voting reports and the same
will be placed before the Boards of AMC and Trustee. The scrutinizer’s certificate will form part of Annual Report and will also be uploaded on the website of IAMI (www.invescomutualfund.com).
●
A confirmation shall also be submitted by Trustees in its half yearly report to SEBI
that IAMI have voted on important decisions affecting interests of unitholders.
E-38
APPENDIX F - MANAGEMENT FEES
For the last three fiscal years or periods, as applicable, ended February 28 or 29,
the management fees payable by the Fund, the amounts waived by Invesco and the net fees paid by the Fund were as follows:
|
*
|
The Fund commenced operations on March 1, 2023.
|
F-1
APPENDIX G - PORTFOLIO MANAGER(S)
Portfolio Manager Fund Holdings and Information on Other Managed Accounts
Invesco’s portfolio managers develop investment models which are used in connection with the management of certain Invesco Funds as well as other mutual funds for which Invesco
or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered mutual funds,
and other accounts managed for organizations and individuals. The ‘Investments’ chart reflects the portfolio managers' investments in the Fund(s) that they manage and includes investments in the Fund’s shares beneficially owned by a portfolio manager, as determined in accordance with Rule 16a-1(a)(2) under
the Exchange Act (beneficial ownership includes ownership by a portfolio manager’s immediate family members sharing the same household). The ‘Assets Managed’ chart reflects information regarding accounts other than the Fund for which each portfolio manager has day-to-day management responsibilities. Accounts
are grouped into three categories: (i) other registered investment companies; (ii) other pooled investment
vehicles; and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based
on account performance (performance-based fees), information on those accounts is specifically noted. In
addition, any assets denominated in foreign currencies have been converted into U.S. dollars using the
exchange rates as of the applicable date.
Investments
The following information is as of February 29, 2024 (unless otherwise noted):
|
Fund
|
Portfolio
Managers
|
Dollar Range of
Investments in the Fund
|
|
Invesco SMA High Yield Bond Fund
|
||
|
|
Niklas Nordenfelt
|
None
|
|
|
Rahim Shad
|
None
|
|
|
Phillip Susser
|
None
|
|
|
|
|
Assets Managed
The following information is as of February 29, 2024 (unless otherwise noted):
Potential Conflicts of Interest
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day
management responsibilities with respect to more than one Fund or other account. More specifically,
portfolio managers who manage multiple Funds and/or other accounts may be presented with one or more
of the following potential conflicts:
●
The management of multiple Funds and/or other accounts may result in a portfolio manager
devoting unequal time and attention to the management of each Fund and/or other account. The
Adviser and each Sub-Adviser seek to manage such competing interests for the time and attention
of portfolio managers by having portfolio managers focus on a particular investment discipline.
Most other
G-1
accounts managed by a portfolio manager are managed using the same investment models
that are used in connection with the management of the Funds.
●
If a portfolio manager identifies a limited investment opportunity which may be suitable
for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity
due to an allocation of filled purchase or sale orders across all eligible Funds and other
accounts. To deal with these situations, the Adviser, each Sub-Adviser and the Funds have adopted procedures
for allocating portfolio transactions across multiple accounts.
●
The Adviser and each Sub-Adviser determine which broker to use to execute each order
for securities transactions for the Funds, consistent with its duty to seek best execution
of the transaction. However, for certain other accounts (such as mutual funds for which Invesco
or an affiliate acts as sub-adviser, other pooled investment vehicles that are not registered
mutual funds, and other accounts managed for organizations and individuals), the Adviser and each
Sub-Adviser may be limited by the client with respect to the selection of brokers or may be instructed
to direct trades through a particular broker. In these cases, trades for a Fund in a particular
security may be placed separately from, rather than aggregated with, such other accounts. Having separate
transactions with respect to a security may temporarily affect the market price of
the security or the execution of the transaction, or both, to the possible detriment of the Fund or other
account(s) involved.
●
The appearance of a conflict of interest may arise where the Adviser or Sub-Adviser
has an incentive, such as a performance-based management fee, which relates to the management
of one Fund or account but not all Funds and accounts for which a portfolio manager has day-to-day
management responsibilities. None of the Invesco Fund accounts managed have a performance
fee.
●
In the case of a fund-of-funds arrangement, including where a portfolio manager manages
both the investing Fund and an affiliated underlying fund in which the investing Fund invests
or may invest, a conflict of interest may arise if the portfolio manager of the investing Fund receives
material nonpublic information about the underlying fund. For example, such a conflict may
restrict the ability of the portfolio manager to buy or sell securities of the underlying Fund, potentially
for a prolonged period of time, which may adversely affect the Fund.
The Adviser, each Sub-Adviser, and the Funds have adopted certain compliance procedures
which are designed to address these types of conflicts. However, there is no guarantee that
such procedures will detect each and every situation in which a conflict arises.
Description of Compensation Structure
For the Adviser and each Sub-Adviser
The Adviser and each Sub-Adviser seek to maintain a compensation program that is competitively
positioned to attract and retain high-caliber investment professionals. Portfolio
managers receive a base salary, an incentive cash bonus opportunity and a deferred compensation opportunity.
Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes
in the market, as well as to adjust the factors used to determine bonuses to promote competitive Fund
performance. The Adviser and each Sub-Adviser evaluate competitive market compensation by reviewing
compensation survey results conducted by an independent third party of investment industry compensation.
Each portfolio manager's compensation consists of the following three elements:
Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Adviser
and each Sub-Adviser’s intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
Annual Bonus. The portfolio managers are eligible, along with other employees of the Adviser and
each Sub-Adviser, to participate in a discretionary year-end bonus pool. The Compensation
Committee of Invesco Ltd. reviews and approves the firm-wide bonus pool based upon progress against strategic
objectives and
G-2
annual operating plan, including investment performance and financial results. In
addition, while having no direct impact on individual bonuses, assets under management are considered when determining
the starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash
bonus which is based on quantitative (i.e. investment performance) and non-quantitative factors (which may
include, but are not limited to, individual performance, risk management and teamwork).
Each portfolio manager's compensation is linked to the pre-tax investment performance
of the Funds/accounts managed by the portfolio manager as described in Table 1 below.
High investment performance (against applicable peer group and/or benchmarks) would
deliver compensation generally associated with top pay in the industry (determined by reference
to the third-party provided compensation survey information) and poor investment performance (versus
applicable peer group) would result in low bonus compared to the applicable peer group or no bonus at all.
These decisions are reviewed and approved collectively by senior leadership which has responsibility for
executing the compensation approach across the organization.
With respect to Invesco Capital, there is no policy regarding, or agreement with,
the Portfolio Managers or any other senior executive of the Adviser to receive bonuses or any other compensation
in connection with the performance of any of the accounts managed by the Portfolio Managers.
Deferred / Long Term Compensation. Portfolio managers may be granted a deferred compensation award based on a firm-wide bonus pool approved by the Compensation Committee of Invesco
Ltd. Deferred compensation awards may take the form of annual fund deferral awards or long-term equity awards. Annual fund deferral awards are notionally invested in certain Invesco funds selected by the Portfolio Manager and are settled in cash. Long-term equity awards are settled in Invesco Ltd. common shares.
Both fund deferral awards and long-term equity awards have a four-year ratable vesting schedule. The
vesting period aligns the interests of the Portfolio Managers with the long-term interests of clients and shareholders
and encourages retention.
Retirement and health and welfare arrangements. Portfolio managers are eligible to participate in retirement and health and welfare plans and programs that are available generally
to all employees.
G-3
APPENDIX H - ADMINISTRATIVE SERVICES FEES
The Fund paid Invesco the following amounts for administrative services for the last
three fiscal years or periods, as applicable, ended February 28 or 29.
|
Fund Name
|
2024
|
2023
|
2022
|
|
Invesco SMA High Yield Bond Fund *
|
$1,431
|
N/A
|
N/A
|
|
*
|
The Fund commenced operations on March 1, 2023.
|
H-1
APPENDIX I - BROKERAGE COMMISSIONS AND COMMISSIONS ON AFFILIATED TRANSACTIONS
Set forth below are brokerage commissions paid by the Fund during the last three fiscal
years or periods, as applicable, ended February 28 or 29. Unless otherwise indicated, the amount of the brokerage commissions paid by a Fund may change from year to year because of, among other things,
changing asset levels, shareholder activity, and/or portfolio turnover.
I-1
APPENDIX J - RESEARCH SERVICES AND PURCHASE OF SECURITIES OF REGULAR BROKERS OR DEALERS
RESEARCH SERVICES
Research Services
During the fiscal year ended February 29, 2024, as applicable, the Fund did not pay brokerage commissions to brokers for providing Section 28(e) research/brokerage services under Section 28(e) of the Exchange Act.
REGULAR BROKER-DEALERS
During the fiscal year ended February 29, 2024, the Fund did not purchase securities of its “regular” brokers or dealers.
J-1
APPENDIX K - PURCHASE, REDEMPTION AND PRICING OF SHARES
Shares of the Fund may be purchased and held by or on behalf of wrap fee, separately
managed and other discretionary accounts where Invesco or its affiliates have an agreement with
the program sponsor (the “Program Sponsor”) (typically, a registered investment adviser or broker-dealer), or directly with the client, to provide management or advisory services to the account. For more information on buying
shares if you hold shares through a wrap fee, separately managed or other discretionary account program,
please contact your Program Sponsor.
Purchase and Redemption of Shares
Initial Sales Charges. Shares of the Fund are purchased at net asset value, and are not subject to an initial sales charge or to a CDSC. Please refer to the prospectus for more information.
Payments to Sponsors. Invesco may pay Program Sponsor’s fees in exchange for the Program Sponsor’s continuing due diligence, analysis, office access, training, operations and systems support and marketing assistance. These fees may be deducted from management fees remitted to
Invesco or billed separately. In lieu of making such payments, Invesco or its affiliates may agree to
pay Program Sponsors a lump sum payment and/or payment(s) related to specific events such as sponsorship
of conferences, seminars or informational meetings or payment for attendance by persons associated
with the Program Sponsors at conferences, seminars or informational meetings, provide Program Sponsors
or their personnel with occasional tickets to events or other entertainment, meals and small gifts, and
make charitable contributions to valid charitable organizations at the request of Program Sponsors
to the extent permitted by applicable law, rules and regulations. In some cases, these payments may be based
on assets in the wrap accounts or new assets added to those accounts, and may or may not be documented in
advisory agreements between Invesco and the Program Sponsor.
The Distributor, Invesco, and/or their affiliates also may make payments or reimbursements
to Program Sponsors or their affiliated companies, which may be used for the development, maintenance
and availability of services including, but not limited to, platform education and communications,
relationship management support, development to support new or changing products, trading platforms and related
infrastructure/technology and/or legal risk management and regulatory compliance infrastructure
in support of investment-related products, programs and services (collectively, “platform support”) or for various studies, surveys, industry data, access to databases, and research.
Subject to applicable law, Invesco and its affiliates may also provide investment
advisory services to Program Sponsors and their affiliates and may execute brokerage transactions on behalf
of the Portfolios with such Program Sponsors’ affiliates. These Program Sponsors or their affiliates may, in the ordinary course of their financial firm business, recommend that their clients utilize Invesco’s investment advisory services or invest in products sponsored or distributed by the Distributor. In addition, the Distributor
may pay investment consultants or their affiliated companies for certain services including sales personnel
coaching and training.
In addition, some Program Sponsors receive payments from the Distributor and/or Invesco
for providing services with respect to “wrap” account clients holding Fund shares through the Program Sponsor, including, but not limited to, the following services: maintaining separate records for each client’s account with respect to the Fund; aggregating and processing redemption and transfer orders, and processing
purchase orders on behalf of clients, and calculating and disbursing to clients or crediting to clients’ accounts all proceeds of redemptions of shares of the Fund and all dividends and other distributions not reinvested
in shares of the Fund; preparing and transmitting to clients periodic clients account statements showing
the total number of shares owned by them as of the statement closing date, purchases, redemptions, and
transfers of Fund shares by the clients during the period covered by the statement, and the dividends
and other distributions paid to the clients during the statement period; transmitting to clients proxy materials,
reports, and other information received by the Program Sponsor from the Fund and required to be sent
to shareholders under the federal securities laws; transmitting (a) state codes, and (b) detailed Fund share
purchase transaction and purchase-exchange and redemption-exchange information, as necessary to enable the
Fund and the Distributor to comply with certain requirements and state Blue Sky laws, respectively;
providing clients support
K-1
concerning Fund positions maintained in client accounts, including answering questions
and responding to inquiries regarding such investments, trading, and servicing of client accounts; providing
clients with tax documents related to their investment in the Fund for clients’ tax reporting purposes; and other additional administrative services to clients and/or support services to the Fund as may be provided
from time to time by the Program Sponsor, as agreed by the parties and is permitted by applicable statute,
rule or regulation to provide such information or services. These fees are typically assessed on a per-account
basis for those accounts maintained by the Program Sponsor and/or may be assessed to offset the transfer
agency costs of maintaining those accounts that would otherwise be incurred.
A number of factors will be considered in determining the amount of these payments
to Program Sponsors. On some occasions, such payments may be conditioned upon levels of assets
in the wrap accounts and the quality of the Program Sponsor’s relationship with Invesco and its affiliates. The level of such payments made to Program Sponsors will vary from time to time. In general, the
payments by Invesco to Program Sponsors are material relative to the wrap account financial compensation
received by Program Sponsors on wrap account assets invested in the Fund. If Program Sponsors and financial
advisers receive payments or other incentives in differing amounts, they may have financial incentives
for recommending a particular investor adviser or investment medium for wrap accounts.
You should consult your financial adviser and review carefully any disclosure by the
Program Sponsor of your wrap account as to compensation received by the Program Sponsor and your financial
adviser.
Representatives of Invesco visit financial advisors on a regular basis to educate
financial advisors about wrap accounts and the role of the Fund in such accounts. The costs and expenses associated
with these efforts may include travel, lodging, sponsorship at educational seminars and conferences,
entertainment and meals, to the extent permitted by law.
Certain Financial Intermediaries That Received One or More Types of Payments
Admin Partners LLC
ADP Broker Dealer Inc
Alight Financial Solutions LLC
Allianz Life
Allstate
Alta Montclair
Altruist Financial LLC
American Enterprise Investment
American Fidelity Assurance Company
American General
American Portfolios Financial
American United Life Insurance Company
Ascensus LLC
Avantax Investment Services Inc
AXA Advisors LLC
AXA Equitable
AXOS Financial Inc.
Bank of America NA
Bank of New York Mellon
Bank of Oklahoma – Nabank & Co
Bay Bridge Administrators LLC
Benefit Plans Administrators
Benefit Trust Company
BMO Harris Bank NA
BOSC Inc
Brighthouse Life Insurance Co
Broadway National Bank
Brown Brothers Harriman & Co
Cadaret Grant and Co Inc
Cambridge Investment Research Inc
Cavu Securities, LLC
Cetera Financial Group Inc
Cetera Investment Services LLC
Charles Schwab and Company Inc
Citibank NA
Citigroup Global Markets
CoBank
Comerica Bank
Commonwealth Financial Network
CUSO Financial Services LP
Delaware Life Insurance Company
Digital Retirement Solutions
Educators Benefit Consultants LLC
Edward Jones & Co
Ekon Benefits
Empire Fidelity Investments
Empower
Envestnet Asset Management Inc
Envoy Plan Services Inc
Equitable Advisors LLC
Equitable Life
Farmers Financial Solutions LLC
Fidelity Brokerage Services
Fidelity Institutional
Fidelity Investments
Fifth Third
Financial Data Services Inc
First Command
First Financial Administrators
Frost Brokerage Services Inc
Frost National Bank
FSC Securities Corporation
Genworth Financial
Goldman Sachs & Co
Guardian Insurance & Annuity Co Inc
Hantz Financial Services Inc
Hare and Company
Hartford Life
Hilltop Securities Inc
Huntington Securities Inc
Institutional Cash Distributors LLC
Janney Montgomery Scott LLC
Jefferson National Life Insurance Company
Jefferson National Life Insurance Company of New York
John Hancock
JP Morgan Chase Bank
JP Morgan Clearing Corp
JP Morgan Securities LLC
Kestra Investment Services LLC
Key Bank National Association
Legend Group Adviserv
Lincoln Benefit Life Company
Lincoln Financial
Lincoln Financial Securities Corp
Lincoln Investment Planning
Lincoln National Life Insurance
LPL Financial LLC
M&T Bank
Mass Mutual
Merrill Lynch
Merrill Lynch Pierce Fenner and Smith Inc
Metropolitan Life Insurance Company
K-2
Minnesota Life
Mitsubishi UFJ Trust and Banking
MML Investors Services LLC
Moreton Asset Management
Moreton Capital Markets LLC
Morgan Stanley
MSCS Financial Services Inc
Mutual Securities Inc
National Benefit Services LLC
National Financial Services LLC
National Plan Administrators Inc
Nationwide
New York Life Insurance and Annuity Corporation
Newport Retirement Plan Services Inc
Next Financial Group Inc
Northwestern Mutual Investment Services
Osaic, Inc
Oppenheimer & Co Inc
Pacific Financial Group
Pacific Life Insurance Company
Penserv Plan Services Inc
Pershing
Pershing LLC
Primerica Financial Services
Plains Capital Bank
Plan Administrators Inc
PNC Capital Markets LLC
PNC Investments LLC
Principal Life Insurance Company
Protective Life
Pruco Life Insurance Company
Pruco Life Insurance Company of New Jersey
Pruco Securities LLC
Prudential
Raymond James
RBC Capital Markets LLC
RBC Wealth Management
Reliance Trust Company
Rhode Island
Riversource Life Insurance Company
Robert W Baird and Co Inc
Sanctuary Wealth Group
Sammons Financial Network LLC
SB Business Services LLC
Schools First Plan Administration
Security Distributors Inc
Security Financial Resources
SEI Private Trust Company
Sorrento Pacific Financial LLC
Standard Insurance Company
State Street Corporation
Stifel Nicolaus & Co Inc
Sungard
T Rowe Price Associates Inc
Talcott Resolution Life Insurance Company
TCG Administrators
TD Ameritrade
TDS Group Inc
Texas Capital Bank
The OMNI Group
TIAA-CREF
Transamerica Financial Life Insurance Company
Transamerica Life Insurance Company
Treasury Curve
Truist
Trust Management Network LLC
UBS Financial Services Inc
Ultimate Asset Services LLC
UMB Bank
Union Bank
US Bancorp Investments Inc
US Bank
VALIC Financial
Vanguard Brokerage Services
Vanguard Group Inc
Variable Annuity Life Insurance Co
VOYA Financial Advisors Inc
VOYA Insurance and Annuity Company
VOYA Retirement Insurance and Annuity Company
VOYA Services Company
VRSCO-American General Distributors
Wedbush Securities Inc
Wells Fargo
Wells Fargo Bank NA
Wells Fargo Securities LLC
Western International Securities Inc
Zions First National Bank
Zurich American Life Insurance Company
Redemptions
General. Shares of the Fund may be redeemed through an order placed on an investor’s behalf by Invesco or the Program Sponsor to the broker-dealer that executes trades for the separately
managed account. A redemption is effected at the net asset value per share of the Fund next
determined after the redemption request is received in good order. To be in good order, the investor, through
Invesco or the Program Sponsor must give the Fund’s transfer agent or authorized intermediary, such as the broker-dealer that executes trades for the account, all required information and documentation.
Payments from a redemption generally constitute taxable events. Because such payments are funded by
the redemption shares, they may result in a return of capital and in capital gains or losses, rather
than in ordinary income.
An investor or Program Sponsor may submit a written request to the Funds’ transfer agent for correction of transactions involving Fund shares. If the Funds’ transfer agent agrees to correct a transaction, and the correction requires a dividend adjustment, the investor or Program Sponsor must agree
in writing to reimburse the Funds for any resulting loss.
Payment for redeemed institutional shares is normally settled through the NSCC. Any
changes to bank instructions must be submitted to the Funds’ transfer agent in writing. The Funds’ transfer agent may request additional documentation.
The Funds’ transfer agent may request that an intermediary maintain separate master accounts in the Funds for shares held by the intermediary (a) for its own account, for the account
of other institutions and for accounts for which the intermediary acts as a fiduciary; and (b) for accounts for
which the intermediary acts in some other capacity. An intermediary may aggregate its master accounts and sub-accounts
to satisfy the minimum investment requirement.
Contingent Deferred Sales Charges Imposed upon Redemption of Shares
No CDSC is imposed upon redemption of shares of the Fund.
General Information Regarding Purchases and Redemptions
K-3
Good Order. Purchase and redemption orders must be received in good order in accordance with
the Transfer Agent’s policies and procedures and U.S. regulations. The Transfer Agent or authorized intermediary, such as the broker-dealer that executes trades for the separately managed account
reserves the right to refuse transactions. Transactions not in good order will not be processed and once
brought into good order, will receive the current price. To be in good order, an investor or Program Sponsor
must supply the Transfer Agent with all required information and documentation.
Authorized Agents. The Transfer Agent and Invesco Distributors, such as the broker-dealer that executes trades for the separately managed accounts, may authorize agents to accept
purchase and redemption orders that are in good order on behalf of the Invesco Funds. In certain
cases, these authorized agents are authorized to designate other intermediaries to accept purchase and redemption
orders on a Fund’s behalf. The Fund will be deemed to have received the purchase or redemption order when the Fund’s authorized agent or its designee accepts the order. The order will be priced at the
net asset value next determined after the order is accepted by the Fund’s authorized agent or its designee. Orders submitted through a financial intermediary that has not received authorization to accept orders on a Fund’s behalf are priced at the Fund’s net asset value next calculated by the Fund after it receives the order from the financial intermediary and accepts it, which may not occur on the day submitted to the financial
intermediary. (maintained for six months), requests for confirmation of the shareholder’s Social Security Number and current address, and mailings of confirmations promptly after the transactions. The
Transfer Agent reserves the right to modify or terminate the telephone exchange privilege at any time without
notice. An investor may elect not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor.
Inactive or Unclaimed Accounts. The Fund may be required to close your account after a period of inactivity, as determined by applicable U.S. state or territory abandoned or unclaimed
property laws and regulations, and transfer your shares to the appropriate U.S. state or territory.
Please be advised that abandoned or unclaimed property laws and regulations for certain U.S. states or territories
require financial organizations to transfer (escheat) unclaimed property to the appropriate U.S. state
or territory if no activity occurs in an account for a period of time as specified by applicable laws and regulations.
These laws and regulations may require the transfer of shares of the Fund, including shares held
through a traditional or Roth IRA account. For traditional IRA accounts escheated to a U.S. state or territory under
these abandoned or unclaimed property laws and regulations, the escheatment will generally be treated
as a taxable distribution from your IRA to you; federal and any applicable state income tax may be withheld.
This may apply to Roth IRA accounts in addition to traditional IRA accounts. It is the responsibility of
the investor to ensure that the Transfer Agent maintains a correct address for his account(s). An incorrect address
may cause an investor's account statements and other mailings to be returned to the Transfer Agent. Upon receiving
returned mail, the Transfer Agent will attempt to locate the investor or rightful owner of the account.
If the Transfer Agent is unable to locate the investor, then it will determine whether the investor's account
has legally been abandoned. The Transfer Agent is legally obligated to escheat abandoned property to
the appropriate state's unclaimed property administrator in accordance with statutory requirements. The investor's
last known address of record determines which state has jurisdiction. For more information on
unclaimed property and how to maintain an active account, please contact the Fund’s transfer agent.
Miscellaneous Fees. In certain circumstances, the Program Sponsor maintaining the separately managed account through which your Fund shares are held may assess various fees related
to the maintenance of that account, such as:
●
an annual custodial fee on accounts where Invesco Distributors acts as the prototype
sponsor;
●
expedited mailing fees in response to overnight redemption requests; and
●
copying and mailing charges in response to requests for duplicate statements. Please
consult with your Program Sponsor for further details concerning any applicable fees.
K-4
Offering Price
Shares of the Fund are offered at net asset value.
Calculation of Net Asset Value
The Fund generally determines its net asset value per share once daily on each day
the NYSE is open for trading (a business day) as of approximately 4:00 p.m. Eastern Time (the customary
close of regular trading) or earlier in the case of a scheduled early close. In the event of an unscheduled
early close of the NYSE, the Fund generally still will determine the net asset value of its shares as of 4:00 p.m.
Eastern Time on that business day. The Fund determines net asset value per share by dividing the value
of its securities, cash and other assets (including interest accrued but not collected), less all its liabilities
(including accrued expenses and dividends payable), by the total number of shares outstanding. Determination of the Fund’s net asset value per share is made in accordance with generally accepted accounting principles.
Generally, the portfolio securities are recorded in the NAV no later than trade date plus one, except on fiscal
quarter ends, such securities are recorded on trade date.
The net asset value for shareholder transactions may be different than the net asset
value reported in the Fund’s financial statement due to adjustments required by generally accepted accounting principles made to the net asset value of the Fund at period end.
Futures contracts may be valued at the final settlement price set by an exchange on
which they are principally traded. U.S. exchange-traded options are valued at the mean between the
last bid and asked prices from the exchange on which they principally trade. Non-U.S. exchange-traded
options are valued at the final settlement price set by the exchange on which they trade. Options not listed
on an exchange are valued by an independent source at the mean between the last bid and ask prices. A security
listed or traded on an exchange (excluding convertible bonds) held by an Invesco Fund is valued at its last
sales price or official closing price on the exchange where the security is principally traded or, lacking
any trades or official closing price on a particular day, the security may be valued at the closing bid price on
that day. Each equity security traded in the over-the-counter market is valued on the basis of prices furnished by
independent pricing services vendors or market makers. Debt securities (including convertible bonds) and
unlisted equities are fair valued using an evaluated quote provided by an independent pricing vendor. Evaluated
quotes provided by the pricing vendor 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 special securities, dividend rate, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Securities for which market prices are not
provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued
at the last bid price in the case of equity securities and in the case of debt obligations the mean
between the last bid and ask prices. Senior secured floating rate loans, corporate loans and senior secured
floating rate debt securities 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. 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.
Generally, trading in corporate bonds, U.S. Government securities and money market
instruments is substantially completed each day prior to the close of the customary trading session
of the NYSE. The values of such securities used in computing the net asset value of an Invesco Fund’s shares are determined at such times. Occasionally, events affecting the values of such securities may occur between
the times at which such values are determined and the close of the customary trading session of the NYSE.
If the Adviser believes a development/event has actually caused a closing price to no longer reflect current
market value, the closing price may be adjusted to reflect the fair value of the affected security as of the
close of the NYSE as determined in good faith using the valuation policy approved by the Board and related
procedures.
Foreign securities are converted into U.S. dollar amounts using exchange rates as
of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded
equity securities, the
K-5
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 unrepresentative
of market value in the Adviser’s judgment (unreliable). If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make
the closing price unreliable, the Adviser may fair value the security. If an issuer specific event has
occurred that the Adviser determines, in its judgment, is likely to have affected the closing price of a foreign
security, it will price the security at fair value in good faith using the valuation policy approved by the Board
and related procedures. Adjustments to closing prices to reflect fair value may also be based on a screening
process from a pricing vendor 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 market value as of the close
of the NYSE. For foreign securities where the Adviser believes, at the approved degree of certainty,
that the price is not reflective of current market value, the Adviser will use the indication of fair value
from the pricing vendor to determine the fair value of the security. The pricing vendor, pricing methodology
or degree of certainty may change from time to time. Multiple factors may be considered by the pricing vendor
in determining adjustments to reflect fair value and may include information relating to sector indices,
American Depositary Receipts, domestic and foreign index futures, and exchange-traded funds. Invesco Fund
securities primarily traded in foreign markets may be traded in such markets on days that are not business
days of the Invesco Fund. Because the net asset value per share of each Invesco Fund is determined only
on business days of the Invesco Fund, the value of the portfolio securities of an Invesco Fund that invests
in foreign securities may change on days when an investor cannot exchange or redeem shares of the Invesco Fund.
Securities for which market quotations are not available or are unreliable are valued
at fair value as determined in good faith by or under the supervision of the Trust’s officers in accordance with the valuation policy approved by the Board and related procedures. Issuer specific events, market
trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course
of making a good faith determination of a security’s fair value
Redemptions in Kind
Although the Invesco Funds generally intend to pay redemption proceeds solely in cash,
the Invesco Funds reserve the right to determine, in their sole discretion, whether to satisfy
redemption requests by making payment in securities or other property (known as a redemption in kind). For
instance, an Invesco Fund may make a redemption in kind if a cash redemption would disrupt its operations
or performance.
Securities that will be delivered as payment in redemptions in kind will be valued
using the same methodologies that the Invesco Fund typically utilizes in valuing such securities.
Shareholders receiving such securities are likely to incur transaction and brokerage costs on their subsequent
sales of such securities, and the securities may increase or decrease in value until the shareholder sells them.
The Trust, on behalf of the Invesco Funds, made an election under Rule 18f-1 under the 1940 Act (a Rule 18f-1
Election) and therefore, the Trust, on behalf of an Invesco Fund, is obligated to redeem for cash all shares
presented to such Invesco Fund for redemption by any one shareholder in an amount up to the lesser of $250,000
or 1% of that Invesco Fund’s net assets in any 90-day period. The Rule 18f-1 Election is irrevocable while Rule 18f-1 under the 1940 Act is in effect unless the SEC by order permits withdrawal of such Rule 18f-1
Election.
Backup Withholding
Accounts submitted without a correct, certified taxpayer identification number (TIN)
or, alternatively, a correctly completed and currently effective IRS Form W-8 (for non-resident aliens)
or Form W-9 (for U.S. persons including resident aliens) accompanying the registration information, generally
will be subject to backup withholding.
Each Invesco Fund, and other payers, generally must withhold 24% of reportable dividends
(whether paid in cash or reinvested in additional Invesco Fund shares), including exempt-interest
dividends, in the case of any shareholder who fails to provide the Invesco Funds with a TIN and a certification
that he is not subject to backup withholding.
K-6
An investor is subject to backup withholding if:
1. The investor fails to furnish a correct TIN to the Invesco Fund;
2. the IRS notifies the Invesco Fund that the investor furnished an incorrect TIN;
3. the investor or the Invesco Fund is notified by the IRS that the investor is subject
to backup withholding because the investor failed to report all of the interest and dividends on such investor’s tax return (for reportable interest and dividends only);
4. the investor fails to certify to the Invesco Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only);
or
5. the investor does not certify his TIN. This applies only to non-exempt mutual fund
accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations
discussed above. Redemption proceeds are subject to backup withholding only if (1), (2) or (5) above
applies.
Certain payees and payments are exempt from backup withholding and information reporting.
Invesco or the Transfer Agent will not provide Form 1099 to those payees.
Investors should contact the IRS if they have any questions concerning withholding.
IRS Penalties. Investors who do not supply the Invesco Funds with a correct TIN will be subject
to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not
willful neglect. If an investor falsifies information on this form or makes any other false statement resulting
in no backup withholding on an account which should be subject to backup withholding, such investor
may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines
and/or imprisonment.
Nonresident Aliens. Nonresident alien individuals and foreign entities with a valid Form W-8 are not
subject to the backup withholding previously discussed. The Form W-8 generally remains
in effect for a period starting on the date the Form is signed and ending on the last day of the third succeeding
calendar year. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate
on ordinary income dividends and other distributions. Under applicable treaty law, residents of treaty
countries may qualify for a reduced rate of withholding or a withholding exemption. Nonresident alien individuals
and some foreign entities failing to provide a valid Form W-8 may be subject to backup withholding
and Form 1099 reporting.
K-7
PART C. OTHER INFORMATION
Item 28. Exhibits.
|
Exhibit
Number
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Description
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||
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a
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|
|
|
|
b
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|
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|
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c
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|
|
Articles II, VI, VII, VIII and IX of the Fifth Amended and Restated Agreement and
Declaration of Trust, as amended,
and Articles IV, V and VI of the Bylaws, define rights of holders of shares.
|
|
d
|
(1)
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(a)
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|
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d
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(1)
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(b)
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|
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d
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(1)
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(c)
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|
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d
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(1)
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(d)
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|
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d
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(1)
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(e)
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|
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d
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(2)
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(a)
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|
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d
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(2)
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(b)
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|
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d
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(2)
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(c)
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|
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d
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(2)
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(d)
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|
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d
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(3)
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(a)
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|
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d
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(3)
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(b)
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|
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d
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(3)
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(c)
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|
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d
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(3)
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(d)
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|
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d
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(3)
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(e)
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|
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d
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(3)
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(f)
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|
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Exhibit
Number
|
Description
|
||
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d
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(3)
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(g)
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|
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d
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(3)
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(h)
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|
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d
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(3)
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(i)
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|
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d
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(3)
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(j)
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|
|
d
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(3)
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(k)
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|
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d
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(3)
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(l)
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|
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d
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(3)
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(m)
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|
|
d
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(3)
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(n)
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|
|
d
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(3)
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(o)
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|
|
d
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(3)
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(p)
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|
|
d
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(3)
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(q)
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|
|
d
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(3)
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(r)
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|
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d
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(3)
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(s)
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|
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d
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(3)
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(t)
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|
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d
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(4)
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(a)
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|
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d
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(4)
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(b)
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|
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d
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(4)
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(c)
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|
|
d
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(4)
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(d)
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|
|
d
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(4)
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(e)
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|
|
d
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(4)
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(f)
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|
|
d
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(4)
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(g)
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|
|
d
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(4)
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(h)
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|
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Exhibit
Number
|
Description
|
||
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d
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(4)
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(i)
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|
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d
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(4)
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(j)
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|
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d
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(4)
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(k)
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|
|
d
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(4)
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(l)
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|
|
d
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(4)
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(m)
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|
|
d
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(4)
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(n)
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|
|
d
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(4)
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(o)
|
|
|
d
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(4)
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(p)
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|
|
d
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(4)
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(q)
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|
|
d
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(4)
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(r)
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|
|
d
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(4)
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(s)
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|
|
d
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(4)
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(t)
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|
|
d
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(5)
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(a)
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|
|
d
|
(5)
|
(b)
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|
|
d
|
(5)
|
(c)
|
|
|
d
|
(5)
|
(d)
|
|
|
d
|
(5)
|
(e)
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|
|
d
|
(5)
|
(f)
|
|
|
d
|
(5)
|
(g)
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|
|
d
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(5)
|
(h)
|
|
|
e
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(1)
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(a)
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|
|
e
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(1)
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(b)
|
|
|
Exhibit
Number
|
Description
|
||
|
e
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(1)
|
(c)
|
|
|
e
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(1)
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(d)
|
|
|
e
|
(1)
|
(e)
|
|
|
e
|
(1)
|
(f)
|
|
|
e
|
(1)
|
(g)
|
|
|
e
|
(1)
|
(h)
|
|
|
e
|
(1)
|
(i)
|
|
|
e
|
(1)
|
(j)
|
|
|
e
|
(1)
|
(k)
|
|
|
e
|
(1)
|
(l)
|
|
|
e
|
(1)
|
(m)
|
|
|
e
|
(1)
|
(n)
|
|
|
e
|
(1)
|
(o)
|
|
|
e
|
(1)
|
(p)
|
|
|
e
|
(1)
|
(q)
|
|
|
e
|
(1)
|
(r)
|
|
|
e
|
(1)
|
(s)
|
|
|
e
|
(1)
|
(t)
|
|
|
e
|
(1)
|
(u)
|
|
|
e
|
(1)
|
(v)
|
|
|
e
|
(2)
|
|
|
|
e
|
(3)
|
|
|
|
f
|
(1)
|
|
|
|
Exhibit
Number
|
Description
|
||
|
m
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(1)
|
(b)
|
|
|
m
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(1)
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(c)
|
|
|
m
|
(1)
|
(d)
|
|
|
m
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(1)
|
(e)
|
|
|
m
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(1)
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(f)
|
|
|
m
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(1)
|
(g)
|
|
|
m
|
(1)
|
(h)
|
|
|
m
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(2)
|
(a)
|
|
|
m
|
(2)
|
(b)
|
|
|
m
|
(3)
|
(a)
|
|
|
m
|
(3)
|
(b)
|
|
|
n
|
|
|
|
|
o
|
|
|
Reserved.
|
|
p
|
(1)
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|
|
|
p
|
(2)
|
|
|
|
p
|
(3)
|
|
|
|
q
|
|
|
|
|
101.INS
|
XBRL Instance Document- the instance document does not appear in the Interactive Data
File because its XBRL tags
are embedded within the inline XBRL document
|
||
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
||
|
|
|
|
|
(1)
Incorporated herein by reference to Post-Effective Amendment No. 17 filed electronically
on December 21, 2001.
(2)
Incorporated herein by reference to Post-Effective Amendment No. 21 filed electronically
on November 20, 2002.
(3)
Incorporated herein by reference to Post-Effective Amendment No. 26 filed electronically
on April 30, 2004.
(4)
Incorporated herein by reference to Post-Effective Amendment No. 34 filed electronically
on November 14, 2007.
(5)
Incorporated herein by reference to Post-Effective Amendment No. 35 filed electronically
on February 20, 2008.
(6)
Incorporated herein by reference to Post-Effective Amendment No. 39 filed electronically
on November 19, 2009.
(7)
Incorporated herein by reference to Post-Effective Amendment No. 64 filed electronically
on June 26, 2014.
(8)
Incorporated herein by reference to Post-Effective Amendment No. 66 filed electronically
on June 24, 2015.
(9)
Incorporated herein by reference to Post-Effective Amendment No. 69 filed electronically
on December 18, 2015.
(10)
Incorporated herein by reference to Post-Effective Amendment No. 74 filed electronically
on March 31, 2017.
(11)
Incorporated herein by reference to Post-Effective Amendment No. 80 filed electronically
on June 26, 2018.
(12)
Incorporated herein by reference to Post-Effective Amendment No. 86 filed electronically
on April 26, 2019.
(13)
Incorporated herein by reference to Post-Effective Amendment No. 89 filed electronically
on June 27, 2019.
(14)
Incorporated herein by reference to Post-Effective Amendment No. 91 filed electronically
on September 26, 2019.
(15)
Incorporated herein by reference to Post-Effective Amendment No. 137 to AIM Counselor
Series Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A on August 21, 2020.
(16)
Incorporated herein by reference to Post-Effective Amendment No. 139 to AIM Counselor
Series Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A on October 13, 2020.
(17)
Incorporated herein by reference to Post-Effective Amendment No. 191 to AIM Investment
Funds (Invesco Investment Funds) Registration Statement on Form N-1A on February 19, 2021.
(18)
Incorporated herein by reference to Post-Effective Amendment No. 192 to AIM Investment
Funds (Invesco Investment Funds) Registration Statement on Form N-1A on March 30, 2021.
(19)
Incorporated herein by reference to Post-Effective Amendment No.163 to AIM Growth
Series (Invesco Growth Series) Registration on Form N-1A on April 29, 2021.
(20)
Incorporated herein by reference to Post-Effective Amendment No. 141 to AIM Equity
Funds (Invesco Equity Funds) Registration Statement on Form N-1A on February 25, 2021.
(21)
Incorporated herein by reference to Post-Effective Amendment No. 143 to AIM Counselor
Series Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A on December 18, 2020.
(22)
Incorporated herein by reference to Post-Effective Amendment No. 104 filed electronically
on June 25, 2021.
(23)
Incorporated herein by reference to Post-Effective Amendment No. 193 to AIM Investment
Funds (Invesco Investment Funds) Registration Statement on Form N-1A on February 25, 2022.
(24)
Incorporated herein by reference to Post-Effective Amendment No. 105 filed electronically
on June 27, 2022.
(25)
Incorporated herein by reference to Post-Effective Amendment No. 174 to AIM Counselor
Series Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A, filed on December 15, 2022.
(26)
Incorporated herein by reference to Post-Effective Amendment No. 195 to AIM Investment
Funds (Invesco Investment Funds) Registration Statement on Form N-1A on February 28, 2023.
(27)
Incorporated herein by reference to Post-Effective Amendment No. 121 to AIM Sector
Funds (Invesco Sector Funds) Registration Statement on Form N-1A, filed on August 25, 2022.
(28)
Incorporated herein by reference to Post-Effective Amendment No. 107 filed electronically
on March 1, 2023.
(29)
Incorporated herein by reference to Post-Effective Amendment No. 108 filed electronically
on June 27, 2023.
(30)
Incorporated by reference to Post Effective Amendment No. 95 to AIM Tax-Exempt Funds
(Invesco Tax-Exempt Funds) Registration Statement on Form N-1A, filed on June 27, 2023.
(31)
Incorporated by reference to Post-Effective Amendment No. 122 to AIM Sector Funds
(Invesco Sector Funds) Registration Statement on Form N-1A on August 25, 2023.
(32)
Incorporated by reference to Post Effective Amendment No. 189 to AIM Counselor Series
Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A, filed on December 14, 2023.
(33)
Incorporated by reference to Post-Effective Amendment No. 191 to AIM Counselor Series
Trust (Invesco Counselor Series Trust) Registration Statement on Form N-1A, filed on February 2, 2024.
(34)
Incorporated by reference to PEA No. 104 to AIM International Mutual Funds (Invesco
International Mutual Funds) Registration Statement on Form N-1A, filed on February 27, 2024.
(35)
Incorporated by reference to Post-Effective Amendment No. 198 to AIM Investment Funds
(Invesco Investment Funds) Registration Statement on Form N-1A on March 27, 2024.
(36)
Incorporated by reference to Post-Effective Amendment No. 94 to Short-Term Investments
Trust Registration Statement on Form N-1A on March 28, 2024
(*)
Filed herewith electronically.
Item 29. Persons Controlled by or Under Common Control with the Fund.
None.
Item 30. Indemnification.
Indemnification provisions for officers, trustees, and employees of the Registrant are set forth in Article VIII of the Registrant’s Fifth Amended and Restated Agreement and Declaration of Trust and Article VIII of
its Bylaws, and are hereby incorporated by reference. See Items 28(a) and (b) above. Under the Fifth Amended and Restated Agreement
and Declaration of Trust effective as of September 20, 2022, as amended (i) Trustees or officers, when acting in such capacity,
shall not be personally liable for any act, omission or obligation of the Registrant or any Trustee or officer except by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office with the
Trust; (ii) every Trustee, officer, employee or agent of
the Registrant shall be indemnified to the fullest extent permitted under the Delaware Statutory Trust Act, the Registrant’s Bylaws and other applicable law; (iii) in case any shareholder or former shareholder of the
Registrant shall be held to be personally liable solely by reason of his being or having been a shareholder of the Registrant or any
portfolio or class and not because of his acts or omissions or for some other reason, the shareholder or former shareholder (or his
heirs, executors, administrators or other legal representatives, or, in the case of a corporation or other entity, its corporate or
general successor) shall be entitled, out of the assets belonging to the applicable portfolio (or allocable to the applicable class), to be
held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Bylaws and applicable
law. The Registrant, on behalf of the affected portfolio (or class), shall upon request by the shareholder, assume the defense of
any such claim made against the shareholder for any act or obligation of that portfolio (or class).
The Registrant and other investment companies and their respective officers and trustees
are insured under a joint Mutual Fund Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, and
certain other domestic insurers with limits up to $100,000,000 and an additional $50,000,000 of excess coverage (plus an additional
$30,000,000 limit that applies to independent directors/trustees only).
Section 16 of the Master Investment Advisory Agreement between the Registrant and
Invesco Advisers, Inc. (Invesco) provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of Invesco Advisers or any of its officers, directors or employees, that Invesco
shall not be subject to liability to the Registrant or to any series of the Registrant, or to any shareholder of any series of the Registrant
for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security. Any liability of Invesco to any series of the Registrant shall not automatically impart
liability on the part of Invesco Advisers to any other series of the Registrant. No series of the Registrant shall be liable for the
obligations of any other series of the Registrant.
Section 10 of the Master Intergroup Sub-Advisory Contract for Mutual Funds (the Sub-Advisory
Contract) between Invesco on behalf of Registrant, and each of Invesco Asset Management Deutschland GmbH, Invesco
Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Canada Ltd., Invesco Hong Kong Limited and Invesco
Senior Secured Management, Inc., and separate Sub-Advisory Agreements with each of Invesco Capital Management LLC, Invesco
Asset Management (India) Private Limited and OppenheimerFunds, Inc. (each a Sub-Adviser, collectively the Sub-Advisers)
provides that the Sub-Adviser shall not be liable for any costs or liabilities arising from any error of judgment or mistake
of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory
Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-Adviser
in the performance by the Sub-Adviser of its duties or from reckless disregard by the Sub-Adviser of its obligations and duties under
the Sub-Advisory Contract.
Insofar as indemnification for liabilities arising under the Securities Act of 1933
(the Act) may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person
of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 31. Business and Other Connections of the Investment Adviser.
The only employment of a substantial nature of the Invesco’s directors and officers is with the Invesco and its affiliated companies. For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and directors of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited,
Invesco Asset Management (Japan) Limited, Invesco Canada Ltd., Invesco Hong Kong Limited, Invesco Senior Secured Management,
Inc., Invesco Capital Management LLC, Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (each
a Sub-Adviser, collectively the Sub-Advisers) reference is made to Form ADV filed under the Investment Advisers Act of 1940 by
each Sub-Adviser herein incorporated by reference. Reference is also made to the discussion under the caption “Fund Management – The Advisers” in each Prospectus which comprises Part A of this Registration Statement, and to the discussion under the caption “Investment Advisory and Other Services” of the Statement of Additional Information which comprises Part B of this Registration Statement, and to Item 32(b) of this Part C.
Item 32. Principal Underwriters.
(a) Invesco Distributors, Inc., the Registrant’s principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Counselor Series Trust (Invesco Counselor Series Trust)
AIM Equity Funds (Invesco Equity Funds)
AIM Funds Group (Invesco Funds Group)
AIM Growth Series (Invesco Growth Series)
AIM International Mutual Funds (Invesco International Mutual Funds)
AIM Investment Funds (Invesco Investment Funds)
AIM Investment Securities Funds (Invesco Investment Securities Funds)
AIM Sector Funds (Invesco Sector Funds)
AIM Tax-Exempt Funds (Invesco Tax-Exempt Funds)
AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust)
AIM Variable Insurance Funds (Invesco Variable Insurance Funds)
Invesco Dynamic Credit Opportunity Fund
Invesco Senior Loan Fund
Invesco Management Trust
Short-Term Investments Trust
Invesco Actively Managed Exchange-Traded Fund Trust
Invesco Actively Managed Exchange-Traded Commodity Fund Trust
Invesco Exchange-Traded Fund Trust
Invesco Exchange-Traded Fund Trust II
Invesco India Exchange-Traded Fund Trust
Invesco Exchange-Traded Self-Indexed Fund Trust
(b) The following are the Officers and Managers of Invesco Distributors, Inc., the Registrant’s underwriter.
|
NAME AND PRINCIPAL
BUSINESS ADDRESS*
|
POSITIONS AND OFFICES
WITH REGISTRANT
|
POSITIONS AND OFFICES
WITH UNDERWRITER
|
|
Rocco Benedetto
|
None
|
Senior Vice President
|
|
David Borrelli
|
None
|
Senior Vice President
|
|
Ken Brodsky
|
None
|
Senior Vice President
|
|
George Fahey
|
None
|
Senior Vice President
|
|
Mark W. Gregson
|
None
|
Chief Financial Officer,
Financial & Operations Principal
|
|
Trisha B. Hancock
|
None
|
Chief Compliance Officer &
Senior Vice President
|
|
Eliot Honaker
|
None
|
Senior Vice President
|
|
Greg Ketron
|
None
|
Treasurer
|
|
Brian Kiley
|
None
|
Senior Vice President
|
|
Brian Levitt
|
None
|
Senior Vice President
|
|
John McDonough
|
None
|
Director, President & Chief Executive
Officer
|
|
Kevin Neznek
|
None
|
Senior Vice President
|
|
NAME AND PRINCIPAL
BUSINESS ADDRESS*
|
POSITIONS AND OFFICES
WITH REGISTRANT
|
POSITIONS AND OFFICES
WITH UNDERWRITER
|
|
Melanie Ringold
|
Secretary, Senior Vice President
& Chief Legal Officer
|
Secretary
|
|
Adam Rochlin
|
None
|
Senior Vice President
|
|
Benjamin Stewart
|
None
|
Senior Vice President
|
|
Paul E. Temple
|
None
|
Senior Vice President
|
|
Ben Utt
|
None
|
Executive Vice President
|
|
Terry Gibson Vacheron
|
None
|
Executive Vice President
|
|
Crissie Wisdom
|
Anti-Money Laundering Compliance
Officer
|
Anti-Money Laundering Compliance
Officer
|
|
John M. Zerr
|
Senior Vice President
|
Senior Vice President
|
*
The principal business address for all directors and executive officers is Invesco
Distributors, Inc., 11 Greenway Plaza, Houston, Texas 77046-1173.
(c) Not applicable.
Item 33. Location of Accounts and Records.
Invesco Advisers, Inc., 1331 Spring Street NW, Suite 2500, Atlanta, Georgia 30309,
maintains physical possession of each such account, book or other document of the Registrant at the Registrant’s principal executive offices, 11 Greenway Plaza, Houston, Texas 77046-1173, except for those maintained at its Atlanta offices at the address listed
above or at its Louisville, Kentucky offices, 400 West Market Street, Suite 3300, Louisville, Kentucky 40202 and except for those relating
to certain transactions in portfolio securities that are maintained by the Registrant’s Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and The Bank of New York Mellon, 2 Hanson Place, Brooklyn, New
York 11217-1431, with respect to Invesco Government Money Market Fund and Invesco U.S. Government Money Portfolio, and the Registrant’s Transfer Agent and Dividend Paying Agent, Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, Missouri
64121-9078.
Records may also be maintained at the offices of:
|
|
Invesco Asset Management Deutschland GmbH
An der Welle 5, 1st Floor
Frankfurt, Germany 60322
|
|
|
Invesco Asset Management Ltd.
Perpetual Park
Perpetual Park Drive
Henley-on-Thames
Oxfordshire, RG91HH
United Kingdom
|
|
|
Invesco Asset Management (Japan) Limited
Roppongi Hills Mori Tower 14F
6-10-1 Roppongi
Minato-ku, Tokyo 106-6114 Japan
|
|
|
Invesco Hong Kong Limited
45F Jardine House
1 Connaught Place
Central, Hong KongP.R.C.
|
|
|
Invesco Senior Secured Management, Inc.
225 Liberty Street
New York, NY 10281
|
|
|
Invesco Canada Ltd.
120 Bloor Street East
Suite 700
Toronto, Ontario
Canada M4W 1B7
|
|
|
Invesco Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515
|
|
|
Invesco Asset Management (India) Private Limited
3rd Floor, GYS Infinity, Subhash Road
Paranjpe B Scheme, Ville Parle (East)
Mumbai – 400 057, India
|
|
|
OppenheimerFunds, Inc.
225 Liberty Street
New York, NY 10281
|
Item 34. Management Services.
None.
Item 35. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this
Registration Statement under Rule 485(b) under the Securities Act of 1933, as amended, and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the city of Houston, Texas, on the 27th day of
June, 2024.
|
AIM Investment Securities Funds (Invesco Investment Securities Funds)
|
|
|
By:
|
/s/ Glenn Brightman
|
|
|
(Glenn Brightman)
|
|
Title:
|
President
|
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed below by the following persons in the capacities indicated on the dates indicated.
|
SIGNATURE
|
TITLE
|
DATE
|
|
/s/ Glenn Brightman
|
President
|
June 27, 2024
|
|
(Glenn Brightman)
|
(Principal Executive Officer)
|
|
|
/s/ Beth Ann Brown*
|
Chair and Trustee
|
June 27, 2024
|
|
(Beth Ann Brown)
|
|
|
|
/s/ Carol Deckbar*
|
Trustee
|
June 27, 2024
|
|
(Carol Deckbar)
|
|
|
|
/s/ Cynthia Hostetler*
|
Trustee
|
June 27, 2024
|
|
(Cynthia Hostetler)
|
|
|
|
/s/ Eli Jones*
|
Trustee
|
June 27, 2024
|
|
(Eli Jones)
|
|
|
|
/s/ Elizabeth Krentzman*
|
Trustee
|
June 27, 2024
|
|
(Elizabeth Krentzman)
|
|
|
|
/s/ Jeffrey H. Kupor*
|
Trustee
|
June 27, 2024
|
|
(Jeffrey H. Kupor)
|
|
|
|
/s/ Anthony J. LaCava, Jr.*
|
Trustee
|
June 27, 2024
|
|
(Anthony J. LaCava, Jr.)
|
|
|
|
/s/ James Liddy*
|
Trustee
|
June 27, 2024
|
|
(James Liddy)
|
|
|
|
/s/ Prema Mathai-Davis*
|
Trustee
|
June 27, 2024
|
|
(Prema Mathai-Davis)
|
|
|
|
/s/ Joel W. Motley*
|
Trustee
|
June 27, 2024
|
|
(Joel W. Motley)
|
|
|
|
/s/ Teresa M. Ressel*
|
Trustee
|
June 27, 2024
|
|
(Teresa M. Ressel)
|
|
|
|
/s/ Douglas Sharp*
|
Trustee
|
June 27, 2024
|
|
(Douglas Sharp)
|
|
|
|
/s/ Robert C. Troccoli*
|
Trustee
|
June 27, 2024
|
|
(Robert C. Troccoli)
|
|
|
|
/s/ Daniel S. Vandivort*
|
Trustee
|
June 27, 2024
|
|
(Daniel S. Vandivort)
|
|
|
|
|
|
|
|
|
|
|