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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Invesco High Income 2023 Target Term Fund of Beneficial Interest | NYSE:IHIT | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.92 | 0 | 00:00:00 |
| Investment Company Act file number | 811‑23186 | |
| Invesco High Income 2023 Target Term Fund | ||
| (Exact name of registrant as specified in charter) | ||
| 1555 Peachtree Street, N.E., Suite 1800 Atlanta, Georgia 30309 | ||
| (Address of principal executive offices) (Zip code) | ||
| Sheri Morris 1555 Peachtree Street, N.E., Suite 1800 Atlanta, Georgia 30309 | ||
| (Name and address of agent for service) | ||
| Registrant’s telephone number, including area code: | (713) 626‑1919 | |||
| Date of fiscal year end: | 2/28 | |||
| Date of reporting period: | 2/28/2023 | |||
| ITEM 1. | REPORTS TO STOCKHOLDERS. |
| Annual Report to Shareholders | February 28, 2023 |
| Average Annual Total Returns | | |||||||
| As of 2/28/23 |
|
|||||||
| NAV | Market | |||||||
| Inception (11/28/16) |
3.55 | % | 2.82 | % | ||||
| 5 Years |
2.74 | 2.43 | ||||||
| 1 Year |
-2.67 | -1.88 | ||||||
| ∎ | Unless otherwise stated, information presented in this report is as of February 28, 2023, and is based on total net assets applicable to common shares. |
| ∎ | Unless otherwise noted, all data is provided by Invesco. |
| ∎ | To access your Fund’s reports, visit invesco.com/fundreports. |
| ∎ | The Bloomberg U.S. CMBS Investment Grade Index consists of publicly issued, fixed rate, nonconvertible, investment grade debt securities. |
| ∎ | The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
| ∎ | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
| ∎ | “Majority Trustee Vote” means: (a) with respect to a vote of the Board, a vote of the majority of the Trustees then in office, and, if there is one or more Continuing Trustees, a separate vote of a majority of the Continuing Trustees; and (b) with respect to a vote of a committee or sub‑committee of the Board, a vote of the majority of the members of such committee or subcommittee, and, if there is one or more Continuing Trustees on such committee or sub‑committee, a separate vote of a majority of the Continuing Trustees that are members of such committee or sub‑committee. |
| ∎ | “Management Trustee” is a Trustee who has present or former associations with the Trust’s Investment Adviser as causes such person to be an Interested Person of the Trust or its Investment Adviser. |
| ∎ | If a pre‑suit demand upon the Board to bring a derivative action is not required under Section 2.4(a) of the Declaration of Trust, Shareholders eligible to bring such derivative action under the Delaware Act who hold at least 10% of the outstanding Shares of the Trust shall join in the demand for the Board to commence such action. |
| ∎ | Shareholders who hold at least 10% of the outstanding Shares of the Trust and have obtained authorization from the Trustees can bring or maintain a direct action or claim for monetary damages against the Trust or the Trustees predicated upon an express or implied right of action under the Declaration of Trust or the 1940 Act. |
| ∎ | With respect to any direct actions or claims, the Board shall be entitled to retain counsel or other advisors in considering the merits of any request for authorization to bring a direct action and may require an undertaking by the Shareholders making such request to reimburse the Trust for the fees and expense of any such counsel or other advisors and other out of pocket expenses of the Trust, in the event that the Board determines not to bring such action. |
| ∎ | The Trust is permitted to redeem or repurchase Shares of any Shareholder liable to the Trust under Section 2.5 of the Declaration of Trust at a value determined by the Board in accordance with the 1940 Act and other applicable law, and to set off against and retain any distributions otherwise payable to any Shareholder liable to the Trust under Section 2.5 of the Declaration of Trust, in payment of amounts due under Section 2.5 of the Declaration of Trust. |
| ∎ | For purposes of Section 2.5 of the Declaration of Trust, the Board may designate a committee of one Trustee to consider a Shareholder request for authorization to bring a direct action if necessary to create a committee with a majority of Trustees who are “independent trustees” (as such term in defined in the Delaware Act). |
| ∎ | The term of any Trustee standing for re‑election who fails to receive sufficient votes to be elected to office due to a lack of quorum or a failure of such Trustee or any successor Trustee to such Trustee to receive the required Shareholder vote set forth in the Declaration of Trust shall continue until the annual meeting held in the third succeeding year and until a successor Trustee to such Trustee is duly elected and shall have qualified. |
| |
||
| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
| ∎ | In the event that any Trust Property is held by the Trustees, the right, title and interest of the Trustees in the Trust Property shall vest automatically in each Person who may hereafter become a Trustee. |
| ∎ | Without limiting the Section 4.1 of the Declaration of the Trust and subject to any applicable limitation in the Governing Instrument or applicable law, the Trustees shall have power and authority, [among others], to establish one or more committees or sub‑committees, to delegate any of the powers of the Trustees to said committees or sub‑committees and to adopt a written charter for one or more of such committees or subcommittees governing its membership, duties and operations and any other characteristics as the Trustees may deem proper, each of which committees of shall be comprised of one or more members as determined by the Trustees and sub‑committees shall be comprised of one or more members as determined by the committee or such subcommittee (which may be less than the whole number of Trustees then in office), and may be empowered to act for and bind the Trustees and the Trust as if the acts of such committee or sub‑committee were the acts of all the Trustees then in office. |
| ∎ | In accordance with Section 3804(e) of the Delaware Act, any suit, action or proceeding brought by or in the right of any Shareholder or any person claiming any interest in any Shares seeking to enforce any provision of, or based on any matter arising out of, or in connection with, the Declaration of Trust or the Trust, any class or any Shares, including any claim of any nature against the Trust, any Class, the Trustees or officers of the Trust, shall be brought exclusively in the Court of Chancery of the State of Delaware to the extent there is subject matter jurisdiction in such court for the claims asserted or, if not, then in the Superior Court of the State of Delaware, provided, however, that unless the Trust consents in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws, and all Shareholders and other such Persons hereby irrevocably consent to the jurisdiction of such courts (and the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waive, to the fullest extent permitted by law, any objection they may make now or hereafter have to the laying of the venue of any such suit, action or proceeding in such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum and further, IN CONNECTION WITH ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT, ALL SHAREHOLDERS AND ALL OTHER SUCH PERSONS HEREBY IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY JURY TO THE FULLEST EXTENT PERMITTED BY LAW. |
| ∎ | The Board may, by resolution passed by a Majority Trustee Vote, establish one or more sub‑committees of each such Committee, and the membership, duties and operations of each such sub‑committee shall be set forth in the written Charter of the applicable Committee. The Board may, by resolution passed by a Majority Trustee Vote, designate one or more additional committees, including ad hoc committees to address specified issues, each of which may, if deemed advisable by the Board of Trustees, have a written charter. |
| ∎ | The Trustees may, in their sole discretion, determine that a meeting of Shareholders may be held partly or solely by means of remote communications. If authorized by the Trustees, in their sole discretion, and subject to such guidelines and procedures as the Trustees may adopt, Shareholders and proxyholders not physically present at a meeting of Shareholders may, by means of remote communications: (a) participate in a meeting of Shareholders; and (b) be deemed present in person and vote at a meeting of Shareholders whether such meeting is to be held at a designated place or solely by means of remote communications, provided that: (i) the Trust shall implement such measures as the Trustees deem to be reasonable (A) to verify that each person deemed present and permitted to vote at the meeting by means of remote communications is a Shareholder or proxyholder; and (B) to provide such Shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the Shareholders; and (ii) if any Shareholder or proxyholder votes or takes other action at the meeting by means of remote communications, a record of such vote or other action shall be maintained by the Trust. The Trustees may, in their sole discretion, notify Shareholders of any postponement, adjournment or a change of the place of a meeting of Shareholders (including a change to hold the meeting solely by means of remote communications) by a document publicly filed by the Trust with the Commission without the requirement of any further notice under the Bylaws. |
| ∎ | Any Shareholder desiring to nominate any person or persons (as the case may be) for election as a Trustee or Trustees of the Trust shall deliver, as part of such Shareholder Notice, a statement in writing with respect to the person or persons to be nominated, together with any persons to be designated as a proposed substitute nominee in the event that a proposed nominee is unwilling or unable to serve, including by reason of any disqualification (a “Proposed Nominee”) and any Proposed Nominee Associated Person setting forth all information required by the Bylaws, including: |
| ∎ | Any Shareholder who gives a Shareholder Notice of any matter proposed to be brought before the meeting or to elect Proposed Nominees shall deliver, as part of such Shareholder Notice, all statements and representations required by the Bylaws, including: |
| ∎ | A Shareholder providing notice of any nomination or other business proposed to be brought before an annual meeting of Shareholders shall further update and supplement such notice, if necessary, so that, with respect to nominations of persons for election as a Trustee, any additional information reasonably requested by the Board to determine that each person whom the Shareholder proposes to nominate for election as a Trustee is qualified to act as a Trustee, including information reasonably requested by the Board to determine that such proposed candidate has met the trustee qualifications as set out in the Declaration of Trust, is provided, and such update and supplement shall be received by the Secretary at the principal executive offices of the Trust not later than five (5) business days after the request by the Board for additional information regarding trustee qualifications has been delivered to, or mailed and received by, such Shareholder providing notice of any nomination. |
| ∎ | Notwithstanding the foregoing provisions of this Article and without limiting the generality of any other requirements herein, unless otherwise required by law, a Shareholder shall be disqualified from bringing any business proposed to be brought before a meeting if any of the information in such Shareholder’s notice, or provided in connection therewith, is not correct and complete or if such Shareholder does not comply fully with the representations in such notice. |
| ∎ | Add to your account: |
| ∎ | Low transaction costs: |
| ∎ | Convenience: |
| ∎ | Safekeeping: |
| 1. | Premium: If the Fund is trading at a premium - a market price that is higher than its NAV ‑you’ll pay either the NAV or 95 percent of |
| the market price, whichever is greater. When the Fund trades at a premium, you may pay less for your reinvested shares than an investor purchasing shares on the stock exchange. Keep in mind, a portion of your price reduction may be taxable because you are receiving shares at less than market price. |
| 2. | Discount: If the Fund is trading at a discount - a market price that is lower than its NAV ‑ you’ll pay the market price for your reinvested shares. |
| 1. | If you opt to continue to hold your non‑certificated whole shares (Investment Plan Book Shares), they will be held by the Agent electronically as Direct Registration Book-Shares (Book-Entry Shares) and fractional shares will be sold at the then-current market price. Proceeds will be sent via check to your address of record after deducting applicable fees, including per share fees such as any applicable brokerage commissions the Agent is required to pay. |
| 2. | If you opt to sell your shares through the Agent, we will sell all full and fractional shares and send the proceeds via check to your address of record after deducting a $2.50 service fee and per share fees. Per share fees include any applicable brokerage commissions the Agent is required to pay. |
| 3. | You may sell your shares through your financial adviser through the Direct Registration System (DRS). DRS is a service within the securities industry that allows Fund shares to be held in your name in electronic format. You retain full ownership of your shares, without having to hold a share certificate. You should contact your financial adviser to learn more about any restrictions or fees that may apply. |
| By credit quality | % of total investments | |
| AAA |
2.10% | |
| AA+ |
2.30 | |
| AA |
0.70 | |
| AA- |
0.30 | |
| A |
8.00 | |
| A- |
5.10 | |
| BBB+ |
1.60 | |
| BBB |
11.70 | |
| BBB- |
31.50 | |
| BB+ |
3.90 | |
| BB |
11.40 | |
| BB- |
4.10 | |
| B+ |
3.40 | |
| B- |
0.90 | |
| CCC |
2.10 | |
| CCC- |
0.30 | |
| Non‑Rated |
10.20 | |
| Cash |
0.40 | |
| % of total net assets | ||||
| 1. | Commercial Mortgage Trust | 34.29% | ||
| 2. | WFRBS Commercial Mortgage Trust | 22.61 | ||
| 3. | JP Morgan Chase Commercial Mortgage Securities Trust | 20.75 | ||
| 4. | Morgan Stanley Bank of America Merrill Lynch Trust | 12.07 | ||
| 5. | Citigroup Commercial Mortgage Trust | 11.00 | ||
| Principal Amount |
Value | |||||||
| |
||||||||
| Asset-Backed Securities–122.09%(a) |
|
|||||||
| BX Commercial Mortgage Trust, Series 2021-VOLT, Class D, 6.24% (1 mo. USD LIBOR + 1.65%), 09/15/2023(b)(c) |
$ | 1,000,000 | $ | 966,737 | ||||
| |
||||||||
| Citigroup Commercial Mortgage Trust, |
||||||||
| Series 2013-GC11, Class D, 4.26%, 04/10/2023(b)(d)(e) |
14,500,000 | 14,291,214 | ||||||
| |
||||||||
| Series 2013-GC15, Class A4, 4.37%, 09/10/2023(e) |
3,111,450 | 3,087,041 | ||||||
| |
||||||||
| Series 2013-GC17, Class D, 5.10%, 11/10/2023(b)(e) |
4,000,000 | 3,527,748 | ||||||
| |
||||||||
| Series 2014-GC19, Class D, 5.09%, 02/10/2024(b)(d)(e) |
1,500,000 | 1,409,640 | ||||||
| |
||||||||
| Commercial Mortgage Trust, |
||||||||
| Series 2012‑CR2, Class E, 5.07%, 05/15/2023(b)(d)(e) |
1,500,000 | 1,255,319 | ||||||
| |
||||||||
| Series 2013-CR11, Class D, 5.28%, 09/10/2023(b)(d)(e) |
14,523,000 | 13,961,089 | ||||||
| |
||||||||
| Series 2013‑CR6, Class D, 4.23%, 03/10/2023(b)(e) |
3,375,000 | 2,621,757 | ||||||
| |
||||||||
| Series 2013‑CR8, Class D, 4.03%, 05/10/2023(b)(d)(e) |
6,000,000 | 5,610,493 | ||||||
| |
||||||||
| Series 2013‑CR8, Class E, 4.00%, 05/10/2023(b)(e) |
7,000,000 | 6,510,832 | ||||||
| |
||||||||
| Series 2014-CR14, Class D, 4.73%, 01/10/2024(b)(d)(e) |
12,267,000 | 10,871,576 | ||||||
| |
||||||||
| Series 2014-CR16, Class D, 5.08%, 04/10/2024(b)(d)(e) |
12,680,000 | 10,928,158 | ||||||
| |
||||||||
| Series 2014-LC15, Class D, 5.17%, 03/10/2024(b)(d)(e) |
9,010,000 | 8,326,568 | ||||||
| |
||||||||
| Series 2014-UBS3, Class C, 4.90%, 05/10/2024(d)(e) |
10,250,000 | 9,468,175 | ||||||
| |
||||||||
| DBUBS Mortgage Trust, Series 2011- LC3A, Class E, 3.75%, 08/10/2026(b)(e) |
500,000 | 385,394 | ||||||
| |
||||||||
| FREMF Mortgage Trust, |
||||||||
| Series 2014‑K36, Class B, 1.11%, 10/25/2023(b)(e) |
1,025,000 | 1,013,736 | ||||||
| |
||||||||
| Series 2015-KF12, Class B, 10.90% (1 mo. USD LIBOR + 7.10%), 03/25/2023(b)(c) |
837,496 | 836,395 | ||||||
| GS Mortgage Securities Corp. Trust, Series 2018‑TWR, Class G, 8.76% (1 mo. USD LIBOR + 4.17%), 07/15/2023(b)(c) |
1,000,000 | 719,750 | ||||||
| |
||||||||
| GS Mortgage Securities Trust, |
||||||||
| Series 2013-GC10, Class D, 4.56%, 12/10/2024(b)(e) |
6,625,000 | 5,574,473 | ||||||
| |
||||||||
| Series 2013-GC12, Class B, 3.78%, 05/10/2023(e) |
1,865,000 | 1,852,019 | ||||||
| |
||||||||
| Series 2013-GC13, Class D, 4.21%, 06/10/2025(b)(d)(e) |
11,546,000 | 5,259,145 | ||||||
| |
||||||||
| Hilton USA Trust, Series 2016‑SFP, Class E, 5.52%, 11/05/2023(b)(d) |
8,500,000 | 7,914,722 | ||||||
| |
||||||||
| Series 2016‑SFP, Class F, 6.16%, 11/05/2023(b) |
2,000,000 | 1,846,370 | ||||||
| |
||||||||
| Principal Amount |
Value | |||||||
| |
||||||||
| JP Morgan Chase Commercial Mortgage Securities Trust, |
||||||||
| Series 2013‑C10, Class D, 4.35%, 03/15/2023(d)(e) |
$ | 19,348,000 | $ | 16,825,419 | ||||
| |
||||||||
| Series 2013‑C10, Class E, 3.50%, 03/15/2023(b)(e) |
860,000 | 696,319 | ||||||
| |
||||||||
| Series 2013‑C13, Class XA, IO, 0.19%, 06/15/2023(d)(f) |
46,485,264 | 428 | ||||||
| |
||||||||
| Series 2013‑C13, Class XC, IO, 0.23%, 07/15/2023(b)(f) |
69,684,664 | 43,922 | ||||||
| |
||||||||
| Series 2013‑C16, Class D, 5.17%, 11/15/2023(b)(d)(e) |
13,875,000 | 12,748,486 | ||||||
| |
||||||||
| Series 2013-LC11, Class D, 4.37%, 05/15/2023(d)(e) |
10,248,000 | 7,759,981 | ||||||
| |
||||||||
| Series 2018‑PHH, Class E, 7.30% (1 mo. USD LIBOR + 2.71%), 06/15/2023(b)(c)(d) |
3,000,000 | 1,028,576 | ||||||
| |
||||||||
| Series 2018‑PHH, Class F, 7.90% (1 mo. USD LIBOR + 3.31%), 06/15/2023(b)(c) |
2,500,000 | 492,035 | ||||||
| |
||||||||
| Series 2018‑WPT, Class FFX, 5.54%, 07/05/2023(b)(e) |
3,500,000 | 2,535,750 | ||||||
| |
||||||||
| JPMBB Commercial Mortgage Securities Trust, |
||||||||
| Series 2013‑C12, Class D, 4.22%, 06/15/2023(d)(e) |
3,191,933 | 3,069,630 | ||||||
| |
||||||||
| Series 2014‑C19, Class B, 4.39%, 04/15/2024(e) |
6,500,000 | 6,279,748 | ||||||
| |
||||||||
| Series 2014‑C19, Class D, 4.80%, 04/15/2024(b)(d)(e) |
2,500,000 | 2,334,763 | ||||||
| |
||||||||
| Morgan Stanley Bank of America Merrill Lynch Trust, |
||||||||
| Series 2013‑C10, Class D, 4.21%, 06/15/2028(b)(d)(e) |
3,426,000 | 1,665,919 | ||||||
| |
||||||||
| Series 2013‑C13, Class XA, IO, 1.10%, 11/15/2023(d)(f) |
33,287,952 | 98,289 | ||||||
| |
||||||||
| Series 2014‑C14, Class D, 5.23%, 02/15/2024(b)(d)(e) |
7,579,400 | 7,280,438 | ||||||
| |
||||||||
| Series 2014‑C15, Class D, 5.05%, 04/15/2024(b)(d)(e) |
16,500,000 | 15,444,596 | ||||||
| |
||||||||
| UBS‑Barclays Commercial Mortgage Trust, Series 2013‑C5, Class D, 4.29%, 03/10/2023(b)(d)(e) |
8,090,000 | 5,298,798 | ||||||
| |
||||||||
| Principal Amount |
Value | |||||||
| |
||||||||
| WFRBS Commercial Mortgage Trust, |
||||||||
| Series 2012‑C9, Class D, 4.88%, 03/15/2023(b)(d)(e) |
$ | 1,876,923 | $ | 1,753,515 | ||||
| |
||||||||
| Series 2013‑C12, Class E, 3.50%, 03/15/2023(b) |
776,000 | 767,419 | ||||||
| |
||||||||
| Series 2013‑C12, Class XA, IO, 1.18%, 03/15/2023(f) |
211,447 | 0 | ||||||
| |
||||||||
| Series 2013‑C13, Class XA, IO, 1.30%, 04/15/2023(b)(d)(f) |
7,460,718 | 637 | ||||||
| |
||||||||
| Series 2013‑C14, Class D, 4.09%, 06/15/2023(b)(d)(e) |
3,400,000 | 2,154,101 | ||||||
| |
||||||||
| Series 2013‑C16, Class E, 3.85%, 10/15/2023(b) |
9,450,000 | 8,185,345 | ||||||
| |
||||||||
| Series 2013‑C17, Class D, 5.20%, 11/15/2023(b)(d)(e) |
20,419,000 | 18,949,089 | ||||||
| |
||||||||
| Series 2013-UBS1, Class D, 5.19%, 12/15/2023(b)(d)(e) |
5,000,000 | 4,884,395 | ||||||
| |
||||||||
| Series 2014‑C19, Class D, 4.23%, 03/15/2024(b)(d) |
10,000,000 | 9,186,372 | ||||||
| |
||||||||
| Total Asset-Backed Securities (Cost $284,937,760) |
|
247,722,321 | ||||||
| |
||||||||
| U.S. Treasury Securities–7.62% |
|
|||||||
| U.S. Treasury Notes–7.62% |
|
|||||||
| 0.50%, 11/30/2023 (Cost $15,472,641) |
16,000,000 | 15,463,065 | ||||||
| |
||||||||
| Shares | ||||||||
| Preferred Stocks–6.38% |
|
|||||||
| Mortgage REITs–6.38% |
|
|||||||
| Chimera Investment Corp., 8.00%, Series D, Pfd.(g) |
167,800 | 3,557,360 | ||||||
| |
||||||||
| Dynex Capital, Inc., 6.90%, Series C, Pfd.(g) |
65,000 | 1,470,300 | ||||||
| |
||||||||
| PennyMac Mortgage Investment Trust, 8.00%, Series B, Pfd.(g) |
102,181 | 2,438,039 | ||||||
| |
||||||||
| Shares | Value | |||||||
| |
||||||||
| Mortgage REITs–(continued) |
|
|||||||
| Rithm Capital Corp., 7.00%, Series D, Pfd.(g) |
80,000 | $ | 1,729,600 | |||||
| |
||||||||
| Two Harbors Investment Corp., 7.25%, Series C, Pfd.(g) |
173,200 | 3,758,440 | ||||||
| |
||||||||
| Total Preferred Stocks (Cost $14,655,620) |
|
12,953,739 | ||||||
| |
||||||||
| Principal Amount |
||||||||
| U.S. Dollar Denominated Bonds & Notes–1.60% |
| |||||||
| Homebuilding–1.60% |
||||||||
| Taylor Morrison Communities, Inc./Taylor Morrison Holdings II, Inc., 5.63%, 03/01/2024(b) (Cost $3,263,811) |
$ | 3,250,000 | 3,237,878 | |||||
| |
||||||||
| Shares | ||||||||
| Money Market Funds–0.56% |
| |||||||
| Invesco Government & Agency Portfolio, Institutional Class, 4.51%(h)(i) |
395,652 | 395,652 | ||||||
| |
||||||||
| Invesco Liquid Assets Portfolio, Institutional Class, 4.64%(h)(i) |
283,041 | 283,097 | ||||||
| |
||||||||
| Invesco Treasury Portfolio, Institutional Class, 4.50%(h)(i) |
452,173 | 452,174 | ||||||
| |
||||||||
| Total Money Market Funds (Cost $1,130,895) |
|
1,130,923 | ||||||
| |
||||||||
| TOTAL INVESTMENTS IN SECURITIES–138.25% (Cost $319,460,727) |
|
280,507,926 | ||||||
| |
||||||||
| REVERSE REPURCHASE AGREEMENTS–(39.43)% |
|
(80,000,000 | ) | |||||
| |
||||||||
| OTHER ASSETS LESS LIABILITIES–1.18% |
|
2,394,581 | ||||||
| |
||||||||
| NET ASSETS APPLICABLE TO COMMON SHARES–100.00% |
|
$ | 202,902,507 | |||||
| |
||||||||
| Investment Abbreviations: | ||
| IO | – Interest Only | |
| LIBOR | – London Interbank Offered Rate | |
| Pfd. | – Preferred | |
| REIT | – Real Estate Investment Trust | |
| USD | – U.S. Dollar | |
| (a) | Maturity date reflects the anticipated repayment date. |
| (b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at February 28, 2023 was $202,519,469, which represented 99.81% of the Fund’s Net Assets. |
| (c) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on February 28, 2023. |
| (d) | All or a portion of the security is pledged as collateral for open reverse repurchase agreements. See Note 1J. |
| Counterparty | Reverse Repurchase Agreements |
Value of Non‑cash Collateral Pledged* |
Net Amount | |||||||
| | ||||||||||
| Wells Fargo Bank, N.A. |
$80,000,000 | $(80,000,000) | $– | |||||||
| | ||||||||||
| (e) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on February 28, 2023. |
| (f) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on February 28, 2023. |
| (g) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (h) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended February 28, 2023. |
| Value February 28, 2022 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation |
Realized Gain |
Value February 28, 2023 |
Dividend Income | ||||||||||||||||||||||
| |
||||||||||||||||||||||||||||
| Investments in Affiliated Money Market Funds: |
||||||||||||||||||||||||||||
| |
||||||||||||||||||||||||||||
| Invesco Government & Agency Portfolio, Institutional Class |
$ 386,992 | $ | 13,701,191 | $ | (13,692,531 | ) | $ - | $ - | $ 395,652 | $15,826 | ||||||||||||||||||
| |
||||||||||||||||||||||||||||
| Invesco Liquid Assets Portfolio, Institutional Class |
276,387 | 9,786,565 | (9,780,328 | ) | 9 | 464 | 283,097 | 14,862 | ||||||||||||||||||||
| |
||||||||||||||||||||||||||||
| Invesco Treasury Portfolio, Institutional Class |
442,277 | 15,658,505 | (15,648,608 | ) | - | - | 452,174 | 22,800 | ||||||||||||||||||||
| |
||||||||||||||||||||||||||||
| Total |
$1,105,656 | $ | 39,146,261 | $ | (39,121,467 | ) | $ 9 | $464 | $1,130,923 | $53,488 | ||||||||||||||||||
| |
||||||||||||||||||||||||||||
| (i) | The rate shown is the 7‑day SEC standardized yield as of February 28, 2023. |
| Pay/ Receive Floating Rate |
Floating Rate Index | Payment Frequency |
(Pay)/ Receive Fixed Rate |
Payment Frequency |
Maturity Date |
Notional Value | Upfront Payments Paid (Received) |
Value | Unrealized Appreciation | |||||||||||||||||||||||
| Interest Rate Risk |
||||||||||||||||||||||||||||||||
| Receive |
3 Month USD LIBOR | Quarterly | (2.82)% | Semi‑Annually | 12/01/2023 | USD 8,000,000 | $– | $ 156,109 | $ 156,109 | |||||||||||||||||||||||
| Receive |
1 Month USD LIBOR | Monthly | (2.12) | Semi-Annually | 12/01/2023 | USD 50,000,000 | – | 1,195,691 | 1,195,691 | |||||||||||||||||||||||
| Total Centrally Cleared Interest Rate Swap Agreements |
|
$– | $1,351,800 | $1,351,800 | ||||||||||||||||||||||||||||
| (a) | Centrally Cleared Swap Agreements collateralized by $286,751 cash held with Merrill Lynch International. |
| LIBOR | –London Interbank Offered Rate | |
| USD | –U.S. Dollar | |
| Assets: |
||||
| Investments in unaffiliated securities, at value (Cost $ 318,329,832) |
$ | 279,377,003 | ||
| Investments in affiliated money market funds, at value (Cost $ 1,130,895) |
1,130,923 | |||
| Other investments: |
||||
| Variation margin receivable–centrally cleared swap agreements |
439,247 | |||
| Deposits with brokers: |
||||
| Cash collateral – centrally cleared swap agreements |
286,751 | |||
| Cash |
575,122 | |||
| Receivable for: |
||||
| Dividends |
143,114 | |||
| Interest |
1,259,764 | |||
| Investment for trustee deferred compensation and retirement plans |
22,648 | |||
| Other assets |
1,106 | |||
| Total assets |
283,235,678 | |||
| Liabilities: |
||||
| Payable for: |
||||
| Reverse repurchase agreements |
80,000,000 | |||
| Dividends |
47,963 | |||
| Accrued fees to affiliates |
20,747 | |||
| Accrued interest expense |
26,155 | |||
| Accrued trustees’ and officers’ fees and benefits |
1,542 | |||
| Accrued other operating expenses |
214,116 | |||
| Trustee deferred compensation and retirement plans |
22,648 | |||
| Total liabilities |
80,333,171 | |||
| Net assets applicable to common shares |
$ | 202,902,507 | ||
| Net assets applicable to common shares consist of: |
||||
| Shares of beneficial interest – common shares |
$ | 236,445,744 | ||
| |
||||
| Distributable earnings (loss) |
(33,543,237 | ) | ||
| |
||||
| $ | 202,902,507 | |||
| |
||||
| Common shares outstanding, no par value, with an unlimited number of common shares authorized: |
||||
| Shares outstanding |
24,145,611 | |||
| |
||||
| Net asset value per common share |
$ | 8.40 | ||
| |
||||
| Market value per common share |
$ | 8.18 | ||
| |
||||
| Investment income: |
||||
| Interest |
$ | 17,626,402 | ||
| |
||||
| Dividends |
1,189,916 | |||
| |
||||
| Dividends from affiliated money market funds |
53,488 | |||
| |
||||
| Total investment income |
18,869,806 | |||
| |
||||
| Expenses: |
||||
| Advisory fees |
2,022,168 | |||
| |
||||
| Administrative services fees |
30,661 | |||
| |
||||
| Custodian fees |
8,313 | |||
| |
||||
| Interest, facilities and maintenance fees |
2,984,949 | |||
| |
||||
| Transfer agent fees |
13,423 | |||
| |
||||
| Trustees’ and officers’ fees and benefits |
17,044 | |||
| |
||||
| Registration and filing fees |
21,390 | |||
| |
||||
| Reports to shareholders |
17,955 | |||
| |
||||
| Professional services fees |
104,928 | |||
| |
||||
| Other |
132,590 | |||
| |
||||
| Total expenses |
5,353,421 | |||
| |
||||
| Less: Fees waived |
(2,050 | ) | ||
| |
||||
| Net expenses |
5,351,371 | |||
| |
||||
| Net investment income |
13,518,435 | |||
| |
||||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Unaffiliated investment securities |
(90,630 | ) | ||
| |
||||
| Affiliated investment securities |
464 | |||
| |
||||
| Swap agreements |
166,730 | |||
| |
||||
| 76,564 | ||||
| |
||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Unaffiliated investment securities |
(21,791,598 | ) | ||
| |
||||
| Affiliated investment securities |
9 | |||
| |
||||
| Swap agreements |
2,101,020 | |||
| |
||||
| (19,690,569 | ) | |||
| |
||||
| Net realized and unrealized gain (loss) |
(19,614,005 | ) | ||
| |
||||
| Net increase (decrease) in net assets resulting from operations applicable to common shares |
$ | (6,095,570 | ) | |
| |
||||
| 2023 | 2022 | |||||||
| |
||||||||
| Operations: |
||||||||
| Net investment income |
$ | 13,518,435 | $ | 15,353,044 | ||||
| |
||||||||
| Net realized gain (loss) |
76,564 | (754,117 | ) | |||||
| |
||||||||
| Change in net unrealized appreciation (depreciation) |
(19,690,569 | ) | (1,934,042 | ) | ||||
| |
||||||||
| Net increase (decrease) in net assets resulting from operations applicable to common shares |
(6,095,570 | ) | 12,664,885 | |||||
| |
||||||||
| Distributions to common shareholders from distributable earnings |
(11,068,647 | ) | (13,305,274 | ) | ||||
| |
||||||||
| Net increase in common shares of beneficial interest |
51,922 | 764,641 | ||||||
| |
||||||||
| Net increase (decrease) in net assets applicable to common shares |
(17,112,295 | ) | 124,252 | |||||
| |
||||||||
| Net assets applicable to common shares: |
||||||||
| Beginning of year |
220,014,802 | 219,890,550 | ||||||
| |
||||||||
| End of year |
$ | 202,902,507 | $ | 220,014,802 | ||||
| |
||||||||
| Cash provided by operating activities: |
||||
| Net increase (decrease) in net assets resulting from operations applicable to common shares |
$ | (6,095,570 | ) | |
| |
||||
| Adjustments to reconcile the change in net assets applicable to common shares from operations to net cash provided by operating activities: |
||||
| Purchases of investments |
(5,920,427 | ) | ||
| |
||||
| Proceeds from sales of investments |
18,824,159 | |||
| |
||||
| Purchases of short-term investments, net |
(14,671,900 | ) | ||
| |
||||
| Amortization of premium on investment securities |
1,643,241 | |||
| |
||||
| Accretion of discount on investment securities |
(4,265,685 | ) | ||
| |
||||
| Net realized loss from investment securities |
90,630 | |||
| |
||||
| Net change in unrealized depreciation on investment securities |
21,791,598 | |||
| |
||||
| Change in operating assets and liabilities: |
||||
| |
||||
| Decrease in receivables and other assets |
771 | |||
| |
||||
| Increase in accrued expenses and other payables |
116,106 | |||
| |
||||
| Net change in transactions in swap agreements |
(622,144 | ) | ||
| |
||||
| Net cash provided by operating activities |
10,890,779 | |||
| |
||||
| Cash provided by (used in) financing activities: |
||||
| Dividends paid to common shareholders from distributable earnings |
(11,027,884 | ) | ||
| |
||||
| Net cash provided by (used in) financing activities |
(11,027,884 | ) | ||
| |
||||
| Net decrease in cash and cash equivalents |
(137,105 | ) | ||
| |
||||
| Cash and cash equivalents at beginning of period |
2,129,901 | |||
| |
||||
| Cash and cash equivalents at end of period |
$ | 1,992,796 | ||
| |
||||
| Non‑cash financing activities: |
||||
| Value of shares of beneficial interest issued in reinvestment of dividends paid to shareholders |
$ | 51,922 | ||
| |
||||
| Supplemental disclosure of cash flow information: |
||||
| Cash paid during the period for taxes |
$ | 13,480 | ||
| |
||||
| Cash paid during the period for interest, facilities and maintenance fees |
$ | 2,971,955 | ||
| |
||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year, if applicable. |
| (c) | Total return assumes an investment at the common share market price at the beginning of the period indicated, reinvestment of all distributions for the period in accordance with the Fund’s dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period indicated. Not annualized for periods less than one year, if applicable. |
| (d) | Portfolio turnover is not annualized for periods less than one year, if applicable. |
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
| B. | Securities Transactions and Investment Income – Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay‑in‑kind interest income and non‑cash dividend income received in the form of securities in‑lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex‑dividend date. |
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – The Fund declares and pays monthly dividends from net investment income to common shareholders. Distributions from net realized capital gain, if any, are generally declared and paid annually and are distributed on a pro rata basis to common shareholders. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
| F. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period‑end date and before the date the financial statements are released to print. |
| G. | Indemnifications – Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| H. | Cash and Cash Equivalents – For the purposes of the Statement of Cash Flows, the Fund defines Cash and Cash Equivalents as cash (including foreign currency), money market funds, cash pledged as collateral and other investments held in lieu of cash and excludes investments made with cash collateral received. The cash pledged as collateral included in Cash and Cash Equivalents is restricted cash. |
| I. | Commercial Mortgage-Backed Securities – The Fund may invest in both single and multi-issuer Commercial Mortgage-Backed Securities (“CMBS”). This includes both investment grade and non‑investment grade CMBS as well as other non‑rated CMBS. A CMBS is a type of mortgage-backed security that is secured by one or more mortgage loans on interests in commercial real estate property. CMBS differ from conventional debt securities because principal is paid back over the life of the security rather than at maturity. Investments in CMBS are subject to the various risks which relate to the pool of underlying assets in which the CMBS represents an interest. Securities backed by commercial real estate assets are subject to securities market risks as well as risks similar to those of direct ownership of commercial real estate loans. Risks include the ability of a borrower to meet its obligations on the loan which could lead to default or foreclosure of the property. Such actions may impact the amount of proceeds ultimately derived from the loan, and the timing of receipt of such proceeds. |
| J. | Reverse Repurchase Agreements – The Fund may enter into reverse repurchase agreements. Reverse repurchase agreements involve the sale of securities held by the Fund, with an agreement that the Fund will repurchase such securities at an agreed upon price and date. The Fund will use the proceeds of a reverse repurchase agreement (which are considered to be borrowings under the 1940 Act) to purchase other permitted securities either maturing, or under an agreement to resell, at a date simultaneous with or prior to the expiration of the reverse repurchase agreement. The agreements are collateralized by the underlying securities and are carried at the amount at which the securities subsequently will be repurchased as specified in the agreements. Expenses under the Reverse Repurchase Agreements are shown in the Statement of Operations as Interest, facilities and maintenance fees. |
| K. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between two parties (“Counterparties”). A swap agreement may be negotiated bilaterally and traded over‑the‑counter (“OTC”) between two parties (“uncleared/OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and |
| representations such as provisions that require the Fund to maintain a pre‑determined level of net assets, and/or provide limits regarding the decline of the Fund’s NAV per share over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
| L. | LIBOR Risk – The Fund may have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates. |
| M. | Leverage Risk – The Fund may utilize leverage to seek to enhance the yield of the Fund by borrowing. There are risks associated with borrowing in an effort to increase the yield and distributions on the common shares, including that the costs of the financial leverage may exceed the income from investments purchased with such leverage proceeds, the higher volatility of the NAV of the shares, and that fluctuations in the interest rates on the borrowing may affect the yield and distributions to the common shareholders. There can be no assurance that the Fund’s leverage strategy will be successful. |
| N. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
| O. | Other Risks – 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. |
| P. | COVID‑19 Risk – The COVID‑19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre‑existing political, social and economic risks locally or globally and cause general concern and uncertainty. COVID‑19 is likely to result in declining property rents and vacancy rates which |
| will impact the financial stability of mortgage loans and mortgage loan borrowers underlying the CMBS, REITs and related real estate investments owned by the Fund. Potentially elevated levels of default would have an adverse impact on the Fund’s income, the value of its assets and distributions to its shareholders. The Fund’s ability to return the Original NAV to shareholders on or about the Termination Date may be impacted by current market conditions and will also depend on market conditions on or about the Termination Date, the presence or absence of defaulted or distressed securities in the Fund’s portfolio that may prevent those securities from being sold in a timely manner at a reasonable price and various portfolio and cash flow management techniques. The full economic impact and ongoing effects of COVID‑19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
| Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Adviser’s assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Investments in Securities |
||||||||||||||||||||||||||||
| Asset-Backed Securities |
$ | – | $ | 247,722,321 | $– | $ | 247,722,321 | |||||||||||||||||||||
| U.S. Treasury Securities |
– | 15,463,065 | – | 15,463,065 | ||||||||||||||||||||||||
| Preferred Stocks |
12,953,739 | – | – | 12,953,739 | ||||||||||||||||||||||||
| U.S. Dollar Denominated Bonds & Notes |
– | 3,237,878 | – | 3,237,878 | ||||||||||||||||||||||||
| Money Market Funds |
1,130,923 | – | – | 1,130,923 | ||||||||||||||||||||||||
| Total Investments in Securities |
14,084,662 | 266,423,264 | – | 280,507,926 | ||||||||||||||||||||||||
| Other Investments - Assets* |
||||||||||||||||||||||||||||
| Swap Agreements |
– | 1,351,800 | – | 1,351,800 | ||||||||||||||||||||||||
| Reverse Repurchase Agreements |
– | (80,000,000 | ) | – | (80,000,000 | ) | ||||||||||||||||||||||
| Total Investments |
$ | 14,084,662 | $ | 187,775,064 | $– | $ | 201,859,726 | |||||||||||||||||||||
| * | Unrealized appreciation. |
| Value | ||||
| Interest | ||||
| Derivative Assets | Rate Risk | |||
| |
||||
| Unrealized appreciation on swap agreements – Centrally Cleared(a) |
$ | 1,351,800 | ||
| |
||||
| Derivatives not subject to master netting agreements |
(1,351,800 | ) | ||
| |
||||
| Total Derivative Assets subject to master netting agreements |
$ | – | ||
| |
||||
| (a) | The daily variation margin receivable at period end is recorded in the Statement of Assets and Liabilities. |
| Location of Gain on | ||||
| Statement of Operations | ||||
| Interest | ||||
| Rate Risk | ||||
| Realized Gain: |
||||
| Swap agreements |
$ 166,730 | |||
| Change in Net Unrealized Appreciation: |
||||
| Swap agreements |
2,101,020 | |||
| Total |
$2,267,750 | |||
| Swap Agreements |
||||
| |
||||
| Average notional value |
$ | 58,000,000 | ||
| |
||||
| Counterparty | Interest Rate |
Maturity date |
Face Value |
Face Value Including Accrued Interest |
||||||||||||
| Wells Fargo Bank, N.A. |
5.82% | 12/31/2023 | $80,000,000 | $80,026,155 | ||||||||||||
| 2023 | 2022 | |||||||||
| Ordinary income* |
$ | 11,008,339 | $13,045,689 | |||||||
| Long-term capital gain |
60,308 | 259,585 | ||||||||
| Total distributions |
$ | 11,068,647 | $13,305,274 | |||||||
| * | Includes short-term capital gain distributions, if any. |
| 2023 | ||||
| |
||||
| Undistributed ordinary income |
$ | 3,544,240 | ||
| |
||||
| Net unrealized appreciation (depreciation) – investments |
(37,067,674 | ) | ||
| |
||||
| Temporary book/tax differences |
(19,803 | ) | ||
| |
||||
| Shares of beneficial interest |
236,445,744 | |||
| |
||||
| Total net assets |
$ | 202,902,507 | ||
| |
||||
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis |
| |||
| |
||||
| Aggregate unrealized appreciation of investments |
$ | 1,401,899 | ||
| |
||||
| Aggregate unrealized (depreciation) of investments |
(38,469,573 | ) | ||
| |
||||
| Net unrealized appreciation (depreciation) of investments |
$ | (37,067,674 | ) | |
| |
||||
| Year Ended February 28, |
Year Ended February 28, |
|||||||
| 2023 | 2022 | |||||||
| |
||||||||
| Beginning shares |
24,139,517 | 24,057,852 | ||||||
| |
||||||||
| Shares issued through dividend reinvestment |
6,094 | 81,665 | ||||||
| |
||||||||
| Ending shares |
24,145,611 | 24,139,517 | ||||||
| |
||||||||
| Declaration Date | Amount per Share | Record Date | Payable Date | |||||||||
| |
||||||||||||
| March 1, 2023 |
$0.0350 | March 15, 2023 | March 31, 2023 | |||||||||
| |
||||||||||||
| April 3, 2023 |
$0.0350 | April 17, 2023 | April 28, 2023 | |||||||||
| |
||||||||||||
| |
Federal and State Income Tax | |||||
| Long-Term Capital Gain Distributions | $ | 60,308 | ||||
| Qualified Dividend Income* | 0.00 | % | ||||
| Corporate Dividends Received Deduction* | 0.00 | % | ||||
| U.S. Treasury Obligations* | 0.38 | % | ||||
| Qualified Business Income* | 5.39 | % | ||||
| Business Interest Income* | 79.12 | % |
| * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
| |
Non‑Resident Alien Shareholders | |||||
| Short-Term Capital Gain Distributions | $ | 56 | ||||
| Qualified Interest Income** | 82.75 | % |
| ** | The above percentage is based on income dividends paid to shareholders during the Fund’s fiscal year. |
| 1 | Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. Ratings are based upon using Moody’s Investor Services, Inc. (“Moody’s”), Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“Standard & Poor’s” or “S&P”), Fitch Ratings, a part of the Fitch Group (“Fitch”), Kroll Bond Rating Agency, Inc. (“Kroll”), DBRS Limited (“DBRS”) and Morningstar Credit Ratings, LLC (“Morningstar”) if any such nationally recognized statistical rating organizations (“NRSROs”) rate the security. If securities are rated differently by the ratings agencies, the highest rating is applied. For more information on rating methodology, please visit www.standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage; www.fitchratings.com and select “Understanding Credit Ratings” from the drop-down menu on the homepage; and www.moodys.com and select “Methodology,” then “Rating Methodologies” under Research Type on the left-hand side. |
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Interested Trustee | ||||||||
| Martin L. Flanagan1 – 1960 Trustee and Vice Chair | 2016 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Trustee and Vice Chair, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Holding Company (US), Inc. (formerly IVZ Inc.) (holding company), Invesco Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co‑Chief Executive Officer, Co‑President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
175 | None |
| 1 | Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser. |
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Independent Trustees | ||||||||
| Beth Ann Brown – 1968 Trustee (2019) and Chair (August 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; Vice President, Key Account Manager, Liberty Funds Distributor, Inc.; and Trustee of certain Oppenheimer Funds |
175 | Director, Board of Directors of Caron Engineering Inc.; Advisor, Board of Advisors of Caron Engineering Inc.; President and Director, Acton Shapleigh Youth Conservation Corps (non‑profit) Formerly: President and Director Director of Grahamtastic Connection (non‑profit) | ||||
| 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 |
175 | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); and Independent Directors Council (professional organization) | ||||
| Eli Jones – 1961 Trustee |
2016 | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-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 |
175 | Insperity, Inc. (formerly known as Administaff) (human resources provider); Board Member of the regional board, First Financial Bank Texas; and Boad Member, First Financial Bankshares, Inc. Texas (FFIN) | ||||
| 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 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; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds |
175 | Formerly: Member of the Cartica Funds Board of Directors (private investment fund); Trustee of the University of Florida National Board Foundation; and Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee | ||||
| 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 |
175 | Blue Hills Bank; Member and Chairman, Bentley University, Business School Advisory Council; and Nominating Committee, KPMG LLP | ||||
| Prema Mathai-Davis – 1950 Trustee | 2016 | Retired 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 |
175 | Member of Board of Positive Planet US (non‑profit) and HealthCare Chaplaincy Network (non‑profit) |
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Independent Trustees–(continued) | ||||||||
| 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; and Member of Investment Committee Board of Historic Hudson Valley (non‑profit cultural organization); Member of the Board, Blue Ocean Acquisition Corp.; and Member of the Vestry and the 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); Trustee of certain Oppenheimer Funds; and Director of Columbia Equity Financial Corp. (privately held financial advisor) |
175 | 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); and Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non‑profit journalism) | ||||
| 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); 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 |
175 | None | ||||
| Robert C. Troccoli – 1949 Trustee |
2016 | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP |
175 | None | ||||
| Daniel S. Vandivort – 1954 Trustee |
2019 | President, Flyway Advisory Services LLC (consulting and property management) 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. |
175 | Formerly: Trustee and Governance Chair, Oppenheimer Funds; Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | ||||
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Officers | ||||||||
| Sheri Morris – 1964 President and Principal Executive Officer |
2016 | Director, Invesco Trust Company; Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; 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; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) |
N/A | N/A | ||||
| 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, 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 President, OFI SteelPath, Inc.; Secretary and Senior Vice President, Oppenheimer Acquisition Corp.; Secretary, SteelPath Funds Remediation LLC; and Secretary and Senior Vice President, Trinity Investment Management Corporation Formerly: 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 Investment Vice President, Invesco Funds |
N/A | N/A | ||||
| Andrew R. Schlossberg – 1974 Senior Vice President |
2019 | Senior Vice President, Invesco Group Services, Inc.; Head of the Americas and Senior Managing Director, Invesco Ltd.; Director and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) (registered transfer agent); Senior Vice President, The Invesco Funds; and Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; and Managing Director and Principal Executive Officer, Invesco Capital Management LLC |
N/A | N/A | ||||
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Officers–(continued) | ||||||||
| John M. Zerr – 1962 Senior Vice President |
2016 | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Senior Vice President, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Manager, Invesco Indexing LLC; 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); and 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.; President, Invesco Financial Services Ltd./Services Financiers Invesco Ltée; and Director and Chairman, Invesco Trust Company Formerly: 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 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) |
N/A | N/A | ||||
| Gregory G. McGreevey – 1962 Senior Vice President |
2016 | Senior Managing Director, Invesco Ltd.; Director, Chairman, President, and Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Invesco Mortgage Capital, Inc. and Invesco Senior Secured Management, Inc.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds |
N/A | N/A | ||||
| Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President |
2020 | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; 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: Senior Vice President and Treasurer, Fidelity Investments |
N/A | N/A | ||||
| Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer |
2016 | 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. |
N/A | N/A | ||||
| Name, Year of Birth and 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 Directorship(s) Held by Trustee During Past 5 Years | ||||
| Officers–(continued) | ||||||||
| 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) |
N/A | N/A | ||||
| 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 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; and Associate, Gaston Snow & Ely Bartlett |
N/A | N/A | ||||
| Office of the Fund | Investment Adviser | Auditors | Custodian | |||
| 1331 Spring Street NW, Suite 2500 Atlanta, GA 30309 |
Invesco Advisers, Inc. 1331 Spring Street NW, Suite 2500 Atlanta, GA 30309 |
PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5021 |
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 | |||
| Counsel to the Fund | Counsel to the Independent Trustees | Transfer Agent | ||||
| Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 |
Computer share Trust Company, N.A 250 Royall Street Canton, MA 02021 | ||||
| SEC file number(s): 811‑23186 | CE‑HIN2023TT‑AR‑1 |
(b) Not applicable.
| ITEM 2. | CODE OF ETHICS. |
There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial experts are Cynthia Hostetler, Anthony J. LaCava, Jr., and Robert C. Troccoli. Cynthia Hostetler, Anthony J. LaCava, Jr., and Robert C. Troccoli are “independent” within the meaning of that term as used in Form N-CSR.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Pursuant to PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, PricewaterhouseCoopers LLC (“PwC”) advised the Registrant’s Audit Committee of the following two matters identified since the previous annual Form N-CSR filing that may be reasonably thought to bear on PwC’s independence. PwC advised the Audit Committee that one PwC Partner held a financial interest directly in an investment company within the complex that includes the Funds as well as all registered investment companies advised by the Adviser and its affiliates, including other subsidiaries of the Adviser’s parent company, Invesco Ltd. (collectively the “Invesco Funds Investment Company Complex”) that was inconsistent with the requirements of Rule 2-01(c)(1) of SEC Regulation S-X. In reporting the matter to the Audit Committee, PwC noted, among other things, that the impermissible holding was disposed of by the individual, the individual was not in the chain of command of the audit or the audit partners of the Funds, the financial interest was not material to the net worth of the individual or his or her respective immediate family members and the Funds’ audit engagement team was unaware of the impermissible holdings until after the matter was confirmed to be an independence exception . In addition, PwC considered that the PwC Partner provided non-audit services that were not relied upon by the audit engagement team in the audits of the financial statements of the Funds. Based on the mitigating factors noted above, PwC advised the Audit Committee that it concluded that its objectivity and impartiality with respect to all issues encompassed within the audit engagement has not been impaired and it believes that a reasonable investor with knowledge of all relevant facts and circumstances for the violations would conclude PwC is capable of exercising objective and impartial judgment on all issues encompassed within the audits of the financial statements of the Funds in the Registrant for the impacted periods.
(a) to (d)
Fees Billed by PwC Related to the Registrant
PwC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all audit and non-audit services provided to the Registrant.
| Fees Billed for Services Rendered to the Registrant for fiscal year end 2023 |
Fees Billed for Services Rendered to the Registrant for fiscal year end 2022 | |||||||||
|
|
||||||||||
| Audit Fees |
$ | 62,281 | $ | 60,175 | ||||||
| Audit-Related Fees |
$ | 0 | $ | 0 | ||||||
| Tax Fees(1) |
$ | 15,053 | $ | 14,520 | ||||||
| All Other Fees |
$ | 0 | $ | 0 | ||||||
| Total Fees |
$ | 77,334 | $ | 74,695 | ||||||
| (1) | Tax Fees for the fiscal years ended February 28, 2023 and February 28, 2022 includes fees billed for preparation of U.S. Tax Returns and Taxable Income calculations, including excise tax and year-to-date estimates for various book-to-tax differences. |
Fees Billed by PwC Related to Invesco and Invesco Affiliates
PwC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all non-audit services provided to Invesco and Invesco Affiliates that were required to be pre-approved.
| Fees Billed for Non- Audit Services Rendered to Invesco and Invesco Affiliates for fiscal year end 2023 That Were Required to be Pre-Approved by the Registrant’s Audit Committee |
Fees Billed for Non-Audit Services Rendered to Invesco and Invesco Affiliates for fiscal year end 2022 That Were Required to be Pre-Approved by the Registrant’s Audit Committee | |||||||||
| Audit-Related Fees(1) |
$ | 874,000 | $ | 801,000 | ||||||
| Tax Fees |
$ | 0 | $ | 0 | ||||||
| All Other Fees |
$ | 0 | $ | 0 | ||||||
| Total Fees |
$ | 874,000 | $ | 801,000 | ||||||
(1) Audit-Related Fees for the fiscal years ended 2023 and 2022 include fees billed related to reviewing controls at a service organization.
(e)(1)
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees
of the Invesco Funds (the “Funds”)
Last Amended March 29, 2017
| I. | Statement of Principles |
The Audit Committees (the “Audit Committee”) of the Boards of Trustees of the Funds (the “Board”) have adopted these policies and procedures (the “Procedures”) with respect to the pre-approval of audit and non-audit services to be provided by the Funds’ independent auditor (the “Auditor”) to the Funds, and to the Funds’ investment adviser(s) and any entity controlling, controlled by, or under common control with the investment adviser(s) that provides ongoing services to the Funds (collectively, “Service Affiliates”).
Under Section 202 of the Sarbanes-Oxley Act of 2002, all audit and non-audit services provided to the Funds by the Auditor must be preapproved by the Audit Committee. Rule 2-01 of Regulation S-X requires that the Audit Committee also pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds (a “Service Affiliate’s Covered Engagement”).
These Procedures set forth the procedures and the conditions pursuant to which the Audit Committee may pre-approve audit and non-audit services for the Funds and a Service Affiliate’s Covered Engagement pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and other organizations and regulatory bodies applicable to the Funds (“Applicable Rules”).1 They address both general pre-approvals without consideration of specific case-by-case services (“general pre-approvals”) and pre-approvals on a case-by-case basis (“specific pre-approvals”). Any services requiring pre-approval that are not within the scope of general pre-approvals hereunder are subject to specific pre-approval. These Procedures also address the delegation by the Audit Committee of pre-approval authority to the Audit Committee Chair or Vice Chair.
| II. | Pre-Approval of Fund Audit Services |
The annual Fund audit services engagement, including terms and fees, is subject to specific pre-approval by the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by an independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will receive, review and consider sufficient information concerning a proposed Fund audit engagement to make a reasonable evaluation of the Auditor’s qualifications and independence. The Audit Committee will oversee the Fund audit services engagement as necessary, including approving any changes in terms, audit scope, conditions and fees.
In addition to approving the Fund audit services engagement at least annually and specifically approving any changes, the Audit Committee may generally or specifically pre-approve engagements for other audit services, which are those services that only an independent auditor reasonably can provide. Other audit
1 Applicable Rules include, for example, New York Stock Exchange (“NYSE”) rules applicable to closed-end funds managed by Invesco and listed on NYSE.
| III. | General and Specific Pre-Approval of Non-Audit Fund Services |
The Audit Committee will consider, at least annually, the list of General Pre-Approved Non-Audit Services which list may be terminated or modified at any time by the Audit Committee. To inform the Audit Committee’s review and approval of General Pre-Approved Non-Audit Services, the Funds’ Treasurer (or his or her designee) and Auditor shall provide such information regarding independence or other matters as the Audit Committee may request.
Any services or fee ranges that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval. Each request for specific pre-approval by the Audit Committee for services to be provided by the Auditor to the Funds must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, and other relevant information sufficient to allow the Audit Committee to consider whether to pre-approve such engagement, including evaluating whether the provision of such services will impair the independence of the Auditor and is otherwise consistent with Applicable Rules.
| IV. | Non-Audit Service Types |
The Audit Committee may provide either general or specific pre-approval of audit-related, tax or other services, each as described in more detail below.
| a. | Audit-Related Services |
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by an independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; services related to mergers, acquisitions or dispositions; compliance with ratings agency requirements and interfund lending activities; and assistance with internal control reporting requirements.
| b. | Tax Services |
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will not approve proposed services of the Auditor which the Audit Committee believes are to be provided in connection with a service or transaction initially recommended by the Auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisers as necessary to ensure the consistency of tax services rendered by the Auditor with the foregoing policy. The Auditor shall not represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Each request to provide tax services under either the general or specific pre-approval of the Audit Committee will include a description from the Auditor in writing of (i) the scope of the service, the fee structure for the engagement, and any side letter or other amendment to the engagement letter, or any other agreement (whether oral, written, or otherwise) between the Auditor and the Funds, relating to the service; and (ii) any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor (or an affiliate of the Auditor) and any
person (other than the Funds or Service Affiliates receiving the services) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will also discuss with the Audit Committee the potential effects of the services on the independence of the Auditor, and document the substance of its discussion with the Audit Committee.
| c. | Other Services |
The Audit Committee may pre-approve other non-audit services so long as the Audit Committee believes that the service will not impair the independence of the Auditor. Appendix I includes a list of services that the Auditor is prohibited from performing by the SEC rules. Appendix I also includes a list of services that would impair the Auditor’s independence unless the Audit Committee reasonably concludes that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements.
| V. | Pre-Approval of Service Affiliate’s Covered Engagements |
Rule 2-01 of Regulation S-X requires that the Audit Committee pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds, defined above as a “Service Affiliate’s Covered Engagement”.
The Audit Committee may provide either general or specific pre-approval of any Service Affiliate’s Covered Engagement, including for audit-related, tax or other services, as described above, if the Audit Committee believes that the provision of the services to a Service Affiliate will not impair the independence of the Auditor with respect to the Funds. Any Service Affiliate’s Covered Engagements that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval.
Each request for specific pre-approval by the Audit Committee of a Service Affiliate’s Covered Engagement must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, a description of the current status of the pre-approval process involving other audit committees in the Invesco investment company complex (as defined in Rule 2-201 of Regulation S-X) with respect to the proposed engagement, and other relevant information sufficient to allow the Audit Committee to consider whether the provision of such services will impair the independence of the Auditor from the Funds. Additionally, the Funds’ Treasurer (or his or her designee) and the Auditor will provide the Audit Committee with a statement that the proposed engagement requires pre-approval by the Audit Committee, the proposed engagement, in their view, will not impair the independence of the Auditor and is consistent with Applicable Rules, and the description of the proposed engagement provided to the Audit Committee is consistent with that presented to or approved by the Invesco audit committee.
Information about all Service Affiliate engagements of the Auditor for non-audit services, whether or not subject to pre-approval by the Audit Committee, shall be provided to the Audit Committee at least quarterly, to allow the Audit Committee to consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Funds. The Funds’ Treasurer and Auditor shall provide the Audit Committee with sufficiently detailed information about the scope of services provided and the fees for such services, to ensure that the Audit Committee can adequately consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Fund
| VI. | Pre-Approved Fee Levels or Established Amounts |
Pre-approved fee levels or ranges for audit and non-audit services to be provided by the Auditor to the Funds, and for a Service Affiliate’s Covered Engagement, under general pre-approval or specific pre-approval will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum pre-approved fee levels or ranges for such services or engagements will be promptly presented to the Audit Committee and will require specific pre-approval by the Audit Committee before payment of any additional fees is made.
| VII. | Delegation |
The Audit Committee hereby delegates, subject to the dollar limitations set forth below, specific authority to its Chair, or in his or her absence, Vice Chair, to pre-approve audit and non-audit services proposed to be provided by the Auditor to the Funds and/or a Service Affiliate’s Covered Engagement, between Audit Committee meetings. Such delegation does not preclude the Chair or Vice Chair from declining, on a case by case basis, to exercise his or her delegated authority and instead convening the Audit Committee to consider and pre-approve any proposed services or engagements.
Notwithstanding the foregoing, the Audit Committee must pre-approve: (a) any non-audit services to be provided to the Funds for which the fees are estimated to exceed $500,000; (b) any Service Affiliate’s Covered Engagement for which the fees are estimated to exceed $500,000; or (c) any cost increase to any previously approved service or engagement that exceeds the greater of $250,000 or 50% of the previously approved fees up to a maximum increase of $500,000.
| VIII. | Compliance with Procedures |
Notwithstanding anything herein to the contrary, failure to pre-approve any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X shall not constitute a violation of these Procedures. The Audit Committee has designated the Funds’ Treasurer to ensure services and engagements are pre-approved in compliance with these Procedures. The Funds’ Treasurer will immediately report to the Chair of the Audit Committee, or the Vice Chair in his or her absence, any breach of these Procedures that comes to the attention of the Funds’ Treasurer or any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
On at least an annual basis, the Auditor will provide the Audit Committee with a summary of all non-audit services provided to any entity in the investment company complex (as defined in section 2-01(f)(14) of Regulation S-X, including the Funds and Service Affiliates) that were not pre-approved, including the nature of services provided and the associated fees.
| IX. | Amendments to Procedures |
All material amendments to these Procedures must be approved in advance by the Audit Committee. Non-material amendments to these Procedures may be made by the Legal and Compliance Departments and will be reported to the Audit Committee at the next regularly scheduled meeting of the Audit Committee.
Appendix I
Non-Audit Services That May Impair the Auditor’s Independence
The Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services:
| ● | Management functions; |
| ● | Human resources; |
| ● | Broker-dealer, investment adviser, or investment banking services ; |
| ● | Legal services; |
| ● | Expert services unrelated to the audit; |
| ● | Any service or product provided for a contingent fee or a commission; |
| ● | Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance; |
| ● | Tax services for persons in financial reporting oversight roles at the Fund; and |
| ● | Any other service that the Public Company Oversight Board determines by regulation is impermissible. |
An Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services unless it is reasonable to conclude that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements:
| ● | Bookkeeping or other services related to the accounting records or financial statements of the audit client; |
| ● | Financial information systems design and implementation; |
| ● | Appraisal or valuation services, fairness opinions, or contribution-in-kind reports; |
| ● | Actuarial services; and |
| ● | Internal audit outsourcing services. |
(e)(2) There were no amounts that were pre-approved by the Audit Committee pursuant to the de minimus exception under Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) In addition to the amounts shown in the tables above, PwC billed Invesco and Invesco Affiliates aggregate fees of $8,440,000 for the fiscal year ended February 28, 2023 and $5,931,000 for the fiscal year ended February 28, 2022. In total, PwC billed the Registrant, Invesco and Invesco Affiliates aggregate non-audit fees of $9,329,053 for the fiscal year ended February 28, 2023 and $6,746,520 for the fiscal year ended February 28, 2022.
PwC provided audit services to the Investment Company complex of approximately $32 million.
(h) The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PwC’s independence.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. |
As of February 28, 2023, the following individuals are jointly and primarily responsible for the day-to-day management of the Trust:
| ● | Mario Clemente, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with Invesco and/or its affiliates since 2014. |
| ● | Kevin Collins, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with Invesco and/or its affiliates since 2007. |
| ● | Brian Norris, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with Invesco and/or its affiliates since 2001. |
| ● | Dan Saylor, Portfolio Manager, who has been responsible for the Fund since 2016 and has been associated with Invesco and/or its affiliates since 2010. |
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 Securities Exchange Act of 1934, as amended (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 Funds 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 28, 2023 (unless otherwise noted):
| Portfolio Managers | Dollar Range of Investments in the Fund
| |
| Invesco High Income 2023 Target Term Fund
| ||
| Mario Clemente |
None | |
| Kevin Collins |
$10,001 - $50,000 | |
| Brian Norris |
$10,001 - $50,000 | |
| Dan Saylor |
None | |
Assets Managed
The following information is as of February 28, 2023 (unless otherwise noted):
| Portfolio Managers | Other Registered Investment Companies Managed | Other Pooled Investment Vehicles Managed | Other Accounts Managed | |||||||||
| Number of Accounts | Assets (in millions) |
Number of Accounts | Assets (in millions) |
Number of Accounts | Assets (in millions) | |||||||
| Invesco High Income 2023 Target Term Fund | ||||||||||||
| Mario Clemente | 4 | $1,687.4 | 1 | $5.2 | None | None | ||||||
| Kevin Collins | 2 | $459.5 | None | None | None | None | ||||||
| Brian Norris | 4 | $1,687.4 | None | None | None | None | ||||||
| Dan Saylor | 1 | $73.2 | None | None | None | None | ||||||
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. |
| ➣ | Finally, 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. |
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.
Table 1
| Sub-Adviser | Performance time period1 | |
| Invesco 2 Invesco Canada2 Invesco Deutschland2 Invesco Hong Kong2 Invesco Asset Management2 Invesco India2 Invesco Listed Real Assets Division2 |
One-, Three- and Five-year performance against Fund peer group | |
| Invesco Senior Secured2, 3 Invesco Capital2,4 |
Not applicable | |
| Invesco Japan | One-, Three- and Five-year performance |
| 1 | Rolling time periods based on calendar year-end. |
| 2 | Portfolio Managers may be granted an annual deferral award that vests on a pro-rata basis over a four-year period. |
| 3 | Invesco Senior Secured’s bonus is based on annual measures of equity return and standard tests of collateralization performance. |
| 4 | 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 deferral awards or long-term equity awards. Annual deferral awards may be granted as an annual stock deferral award or an annual fund deferral award. Annual stock deferral awards are settled in Invesco Ltd. common shares. 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 annual 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
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| (a) | As of April 19, 2023, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of April 19, 2023, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. |
| (b) | There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this |
| report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 13. | EXHIBITS. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Invesco High Income 2023 Target Term Fund
| By: | /s/ Sheri Morris | |
| Sheri Morris | ||
| Principal Executive Officer | ||
| Date: | May 3, 2023 | |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: |
/s/ Sheri Morris | |
| Sheri Morris | ||
| Principal Executive Officer | ||
| Date: |
May 3, 2023 | |
| By: |
/s/ Adrien Deberghes | |
| Adrien Deberghes | ||
| Principal Financial Officer | ||
| Date: |
May 3, 2023 | |
1 Year IHIT Chart |
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