Mutual Fund Retail Share Classes Data as of Dec. 31, 2014 Invesco Senior Loan Fund Quarterly Performance Commentary Nasdaq: A: VSLAX Y: VSLYX Market overview Portfolio Management Thomas Ewald, Phillip Yarrow, Scott Baskind Portfolio Information Total Net Assets $1,131,911,982 Total Number of Holdings 557 Weighted Average Time to Reset (days) 58.85 Average Price 94.63 Top Holdings % of Total Net Assets Asurion LLC First Data Corporation Clear Channel Communications, Inc. Kinetic Concepts, Inc. Scientific Games International, Inc. Delta 2 (LUX) S.a.r.l. Federal-Mogul Holdings Corporation Burger King Corporation Avaya, Inc. Freescale Semiconductor, Inc. 2.63 1.88 Senior Secured Loans Corporate Debt Structured Products Domestic Common Stock Senior Unsecured Loans U.S. Preferred Stock Cash and Cash equivalents - Senior secured loans, as represented by the Credit Suisse Leveraged Loan Index, had a return of –0.37% for the quarter, bringing the year-to-date total return down to 2.06%. - Loans experienced heightened volatility due to concerns surrounding slower economic growth, increased geopolitical tensions and a selloff in risk assets in reaction to lower oil prices. The energy sector accounts for roughly 15% of the BAML High Yield Index, but is a much smaller weight in the Credit Suisse Leveraged Loan Index, at about 4.5%. - The second and third quarter theme of retail outflows compared to institutional demand and collateralized loan obligation (CLO) issuances persisted in the fourth quarter. However, outflows from retail mutual funds were more than offset by CLO issuances and demand from institutional accounts. - There was only one new default during the fourth quarter, with the trailing 12-month default rate ending 2014 well below historical averages. Performance highlights 1.64 1.56 1.51 1.51 - The fund’s Class A shares at net asset value (NAV) had a return of -1.82 in the fourth quarter. (Please see the investment results table on page 2 for fund and index performance.) The fund underperformed its style-specific benchmark, the Credit Suisse Leveraged Loan Index, as well as the Lipper Loan Participation Funds Classification Average, which returned 0.91%. - We note that the loan market had its worst year since 2011 and yet the Invesco Senior Loan Fund returned 1.33% for the year, compared to an average return of 0.47% for its peers, putting the fund in the top 17% of all funds. 1.48 1.44 1.37 1.10 Contributors to performance - The fund benefited from its holdings of recent primary deals, most of which appreciated after the fund’s initial purchase. - On an industry basis, the fund benefited from its positioning in consumer durables. - The fund’s holdings of restructured equities also added to the fund’s relative performance. Investment Categories (%) 108.79 7.44 5.91 3.20 0.66 0.02 -26.01 May not equal 100% due to rounding. Credit Quality Breakdown (% Total)1 BBB BB B CCC CC Not Rated C: VSLCX 0.88 29.58 54.31 9.00 0.24 5.98 Detractors from performance - Use of leverage detracted from relative performance. - The fund’s holdings of Seadrill Partners Finco LLC, Drillships Financing Holding Inc. and Fieldwood Energy LLC all detracted from the fund’s relative performance (0.83%, 0.61% and 0.51% of total net assets, respectively). - The fund’s holdings in the energy and health care sectors negatively affected relative performance as well. Positioning and outlook - Our decision to keep the fund underweight high-yield bonds, compared to other managers, detracted from the fund’s relative performance in the first half of the year, but positively affected fund results during the second half. - Broadly speaking, during the fourth quarter of 2014, we maintained the fund’s general weightings in BB and B-rated issuers, although we slightly increased the allocation to BB-rated credits. - We maintain a positive outlook regarding loan issuer fundamentals because the US economy remains in the middle stages of economic recovery. Though the Federal Reserve’s policy is supportive in the short term, the potential for higher interest rates is approaching. The Fund’s Positioning Versus the Credit Suisse Leveraged Loan Index Investment Results Average Annual Total Returns (%) as of Dec. 31, 2014 Class A Shares Inception: 02/18/05 Period Inception 5 Years 3 Years 1 Year Quarter Max Load 3.25% 2.82 6.86 6.74 -1.50 -4.19 NAV 3.17 7.58 7.90 1.75 -1.00 Class C Shares Inception: 02/18/05 Max CDSC 1.00% 2.41 6.78 7.11 0.11 -2.22 (% underweight/overweight) Class Y Shares Inception: 11/08/13 NAV 2.41 6.78 7.11 1.08 -1.25 NAV 2.60 1.88 -1.06 Style-Specific Index Energy 1.80 Credit Suisse Leveraged Loan Index 5.83 5.84 2.06 -0.37 Retail 1.01 Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary, and you may have a gain or a loss when you sell shares. Index returns do not reflect any fees, expenses or sales charges. No contingent deferred sales charge (CDSC) will be imposed on redemptions of Class C shares following one year from the date shares were purchased. Performance shown at NAV does not include applicable CDSC or front-end sales charges, which would have reduced the performance. Class Y shares have no sales charge; therefore, performance is at NAV. Returns less than one year are cumulative; all others are annualized. Index sources: Bloomberg L.P. Transportation 0.96 Chemicals 0.94 Food/Tobacco 0.76 Diversified Media IT -0.72 -1.55 Gaming/Leisure -1.99 Service -4.27 Health Care -4.36 -5 Expense Ratios Class A Shares Class C Shares Class Y Shares 0 5 % Net % Total 1.92 2.67 1.67 1.92 2.67 1.67 Per the current prospectus 30-Day SEC Yields Class A Shares Class C Shares Class Y Shares 5.75 4.45 6.47 For more information you can visit us at www.invesco.com/us 1 Ratings source: Standard & Poor's. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. Not Rated indicates the debtor was not rated and should not be interpreted as indicating low quality. A negative in Cash indicates fund activity that has accrued or is pending settlement. For more information on Standard and Poor's rating methodology, please visit www.standardandpoors.com and select 'Understanding Ratings' under Rating Resources on the homepage. Class Y shares are available only to certain investors. See the prospectus for more information. Lipper Open End Loan Participation Funds Average represents an average of all of the funds in the Lipper Loan Participation Funds classification. The debt service coverage ratio is the ratio of cash available for debt servicing to principal and interest. The Credit Suisse Leveraged Loan Index represents tradable, senior-secured, U.S.-dollar-denominated non-investment-grade loans. An investment cannot be made directly in an index. A bond's average price is calculated by adding its face value to the price paid for it and dividing the sum by two. Weighted average time to reset is the amount of time required for the base interest rate (usually LIBOR) of all loans in the portfolio to reset or adjust to a new base interest rate. Weighted average effective maturity (WAM) is a measure, as estimated by the fund’s portfolio managers, of the length of time the average security in a bond fund will mature or be redeemed by its issuer. It takes into account mortgage prepayments, puts, adjustable coupons and potential call dates. About risk The fund may use various investment practices that involve special risks, including engaging in interest rate and other hedging and risk management transactions. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. The fund is a closed-end investment company designed primarily for long-term investors and not as a trading vehicle. While there is no restriction on transferring the shares, the fund does not intend to list the shares for trading on any national securities exchange. There is no secondary trading market for shares. An investment in the shares is illiquid. There is no guarantee that you will be able to sell all of the shares that you desire to sell in any repurchase offer by the fund. Under a participation in senior loans, the fund generally will have rights that are more limited than those of lenders or of persons who acquire a senior loan by assignment. In a participation, the fund assumes the credit risk of the lender selling the participation in addition to the credit risk of the borrower. In the event of the insolvency of the lender selling the participation, the fund may be treated as a general creditor of the lender and may not have a senior claim to the lender's interest in the senior loan. Certain participations in senior loans are illiquid and difficult to value. There is less readily available, reliable information about most senior loans than there is for many other types of securities. In addition, there is no minimum rating or other independent evaluation of a borrower or its securities limiting the fund's investments, and the adviser relies primarily on its own evaluation of borrower credit quality rather than on any available independent sources. Senior Loans, like most other debt obligations, are subject to the risk of default. Default in the payment of interest or principal on a Senior Loan will result in a reduction in income to the Fund, a reduction in the value of the Senior Loan and a potential decrease in the Fund’s net asset value. The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates. The fund is subject to certain other risks. Please see the current prospectus for more information regarding the risks associated with an investment in the fund. Explore Intentional Investing with Invesco® NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus. Note: Not all products available at all firms. Advisors, please contact your home office. Opinions expressed are those of the fund's portfolio management. Holdings are subject to change and are not buy/sell recommendations. All data provided by Invesco unless otherwise noted. For US use only. Invesco Senior Loan Fund VK-SLOAN-UPD-1-E 01/15 invesco.com/us Invesco Distributors, Inc.
© Copyright 2020